Your personal savings is your best ally when it comes to paying for college. Scholarships are still contests with no guarantees that you'll win, and financial aid changes each year depending on the budgets of the government and colleges. There is also no guarantee, even if you deserve it, that you will receive all of the financial aid that you need to pay for school. Therefore, it is critical that you start now to maximize your own personal savings. As you will see in this Guide, there are many ways for you to jumpstart your college savings—it's not just about putting pennies into the piggy bank.
Before we get into the strategies, it's important to remember that this information is meant to provide general guidance concerning your saving options. You should always check with an accountant regarding your individual situation and to make sure that tax laws haven't changed.
Given a choice, it is better to begin saving four years before you start college rather than four months. But don't throw up your hands in despair if you have only a year or less to save. Because things like financial aid and scholarships are unpredictable, whatever you can save now may be just enough to fill a critical gap.
Every dollar you save could mean one less dollar you have to borrow, which can reduce the amount of money you might have to pay in interest payments. In fact, money that you save is actually worth a lot more than its face value if it helps you borrow less. So no matter how soon you have to pay that first tuition bill, start saving money today.
One last benefit to saving early is that you also begin to train your family to live on less. Should you have to stop working to go back to school, you'll have to make some changes in your lifestyle. And if you can learn to live on less, then these sacrifices won't seem as difficult.
For many people the key to saving money is to cut unnecessary expenses. Here is a great exercise. Record for an entire month how much you spend. Write down every dollar you spend from food, to clothes, to going to the movies. At the end of the month, add up what's on your list. Where is your money going? What expenses are non-essential or luxuries? Do you really need that $3 cappuccino when you could make it at home instead? Does your family need to eat out that often? It may seem trivial, but we bet you can find more than spare change to save when you carefully examine how your family spends its money.
One family we know noticed that they were spending nearly $300 a month on restaurant and fast food. They switched to eating at home and doing barbecues when they wanted something special, and they were able to put aside more than $3,000 a year toward college.
Instead of buying a new car, push the old one a few more years. Sure, a new kitchen would be nice, but so would graduating from college without having to take out a second mortgage. Remember too that big purchases have long-term consequences. The new car will saddle you with higher insurance payments. Remodeling the bathroom may force you to take out a home equity loan. As long as the purchases are not essential (do spend the money to fix a leaky roof!), consider putting them off until after you are done paying for your education.
Gen and Kelly Tanabe
Founders of SuperCollege and authors of 13 books on college planning.
By: Gen & Kelly Tanabe
Learn how to go back to school without going broke. This is the only book that shows you how to find the best scholarships for adult students, get your employer to pay, have your student loans forgiven and much more.