Texas Savings Plans

Savings Tips — How can I save enough?

Higher education is one of the most important investments a family can make. Many parents look at the spiraling costs of higher education and wonder how they will ever be able to afford it. But thanks to a variety of factors — including new savings programs, availability of financial aid, and low cost public colleges — nearly every family has the ability to send their children to college.

The key to making this dream a reality is starting as soon as possible to save money and invest. But how to begin? Finding money to save for college isn’t always easy.

Like any other major investment, it requires careful planning. With increasing college tuition and cuts in some types of financial aid, it’s important that families do the best they can. We’ve compiled a variety of tips to help parents and students “find” money in their everyday budgets.

Saving for College on a Tight Budget

  • Lifestyle Changes Can Help Increase Savings
    • There are two basic ways to improve your finances: increase your income or cut your costs. Many consumers can cut costs by changing their lifestyles. All too often they spend money they don’t really have on things that are not important to their long-term success.
      • For example, smokers who spend an average of $5 a day on cigarettes can save nearly $2,000 a year that could be put away for their children’s college educations by giving up a vice that will improve their health as well.
    • Most people spend the biggest part of their budgets on food, shelter, clothing and transportation. Yet these life basics also can be a place for major savings:
      • Cook meals at home. Look for restaurant coupons or family night specials when eating out.
      • Clothing can take up a huge chunk of most household budgets, especially if you have a family. So try buying used clothing at yard sales and vintage shops or discount stores.
      • Clip newspaper coupons, then look through the grocery store ads and match your coupons to the sales, saving double. Just remember that if you use coupons, be sure you are actually getting a bargain. Don’t buy an item you won’t use just because you have a coupon.
      • Make simple home repairs and changes yourself instead of hiring a contractor to do the work for you. Local hardware stores will help with tips.
      • Shop at yard sales, consignment shops and local online classified sites to get like-new items at discounted prices.
      • Take public transportation when possible to save on gas.
  • Controlling Impulse Spending
    • Working parents can bring lunch and snacks to work and buy something only when really needed. Simply bringing your lunch to work can save at least $5 a day or $1,300 a year. If you stashed away that money for college, that daily lunch could grow to about $50,000 in 18 years.
    • Make a list before shopping to keep you focused and less likely to buy something on the spur of the moment.
    • Track daily spending for a month, from that small pack of gum to that special outfit, to identify superfluous spending patterns and help pinpoint where painless savings can be made and impulses avoided.
    • A weekly dinner and a movie out for two at even a modest restaurant can cost at least $50 or $200 a month. Cutting back to twice a month and saving the money for college can also grow to nearly $50,000 by the time a toddler is ready for college.
    • Develop the ability to distinguish between your wants and your needs, and you’ll be saving money like a pro in no time.
  • Loose Change Really Adds Up
    • Emptying your pockets at the end of the day and putting the loose change in a bowl or other container adds up over time. It’s an easy way to save without really changing habits.
    • With as little as $1.25 in change a day during a five-day work week, you can save $25 a month or $300 a year. In five years, that small savings will accumulate to about $1,840 and in 10 years to about $4,574. If you can manage to double the monthly amount to $50, your loose change could grow to about $24,000 in 18 years.
    • Experts estimate that there’s more than $10.5 billion in loose change in households across the country that could be used for college or other expenses.
  • Automatic Payments Make Saving Easier
    • Pay yourself first every payday - start small and you won’t miss the money.
    • Many experts suggest signing up to have a fixed amount deducted from you paycheck or checking account each month can make savings easier. A monthly investment of $100 at an estimated 8 percent interest can grow to about $48,000 in 18 years.

The most important thing is to set a savings goal and stick to it.

Attending College on a Budget

Here are several ways you can shave thousands of dollars off your college costs:

  • Earn college credit in high school. Community colleges often offer college classes at local high schools, which students can take in conjunction with their regular classes. Take advantage of them and you could earn a four-year degree in three years.
  • Consider community college -- even if you want a four-year degree. General classes, such as freshman English, are typically transferable from community colleges to its four-year public colleges. And if you take that first year of general classes at a community college, you can cut your tuition bill by more than half.
  • Consider a public college. You could pay half as much to attend a state four-year college as you would at a private college. However, private colleges sometimes offer big financial aid packages. Check with the school’s financial aid counselor.
  • Apply for scholarships and financial aid.Make sure you meet the deadline for the Free Application for Federal Student Aid (FAFSA) -- usually March 1. That one form will put you in the running for needs-based federal grants such as the Pell and SEOG, as well as new grants for academic merit and for students studying math and science, plus low-interest federal student loans.

    Don’t count entirely on federal aid, though. College costs are outpacing federal aid, which isn’t even keeping up with inflation, according to a recent report from The College Board. Ask your high school guidance counselor about Texas financial aid and other sources of scholarships and aid.

  • Live at home. Tuition isn’t the biggest cost of going to college -- room and board is. Tuition and fees might cost you about $4,400 at a four-year college, but room and board will cost you another $6,150, on average.
  • Skip having a car. If you live on campus and use public transportation, this might be a more cost-effective option.
  • Work. Look into work-study, other campus jobs, paid internships and other local jobs to help pay for books, other school expenses, car insurance, gas, etc. Your part-time job might be a way to explore career interests and pay for extra college expenses.

Of course, these are not the only ways you can save money for college, but they are a good place to start. You may wish to speak with your financial institution (bank, credit union) or a financial counselor or investments counselor regarding other opportunities that may be available to you.

Every penny helps. Even if you just save enough money to pay for books, you’re doing great. The bottom line is that if you want to go to college and are willing to work at it, you can find the money to pay for your college education.

Start saving today for just $25