This post is by staff writer Holly Johnson.

According to the Federal Reserve, the average amount of student loan debt carried by a student graduating in 2012 reached a staggering $24,301. And that isn’t the only scary student loan statistic. Overall, student loan debt in the U.S. has reached a cumulative $902 billion dollars, and loan delinquencies are at an all-time high. This is depressing news for everyone, including those of us who want our children to be able to go to college.

Saving for an unpredictable future

Since my kids are so young, I shudder at the thought of what a college education could cost when they graduate from high school. College tuition has outpaced inflation at an astronomical rate. And worse yet, the job outlook for college graduates isn’t all that great. In addition to all of that uncertainty, I’ve found it difficult to do much planning since there are a gazillion possible outcomes. Will my kids go to community college? An in-state university? Will they pursue an advanced degree? At this point, I cannot possibly answer these questions. Still, I haven’t lost hope that I can help them avoid taking on a soul-crushing amount of student loan debt. I certainly can’t predict the future, but I can at least try to prepare for it. And while I don’t necessarily plan on paying for all of the costs of my kids’ college education, I do want to help them as much as I can.

Since I want to shield my children from having to take out enormous student loans, I started saving for their college right away. Once they were given Social Ssecurity numbers, I opened a College 529 account for each of my kids. It was easy to set up their accounts online, and I slowly began putting away small amounts of money on a fairly consistent basis. And I mean s-l-o-w-l-y. When we started saving for them, we began by contributing only $25 per month.

Small sums of money add up

It took a while to see any real growth, but I’m amazed at what I’ve managed to save during their short little lives. I’ve actually been able to build up a decent amount of money for them, and it’s a great relief knowing that I’ve managed to save something. I’ve still got a long way to go, but I did manage to get started and I hope to increase contributions to their accounts steadily over the years.

Saving for college may seem like an impossible feat, but it can be done. If you haven’t started saving for your children’s college, and want to, here are some tips to get started.

  • Make sure that your own finances are in order. Before you start saving for your children’s college education, make sure that your own financial house is in order. Are you saving adequately for retirement? Do you have an emergency fund? Are you in debt? Saving for your children’s college education is admirable, but it shouldn’t be at the cost of your own financial well-being. Once you have your own finances in good shape, you will be in a better position to help your children with theirs.
  • Open a tax-advantaged college savings account for your child. Do some research online and determine what plan is best for your child and situation. I chose my state’s college savings plan because of low administration fees and investment choices that I was comfortable with. It’s important to note that United States residents are not limited to investing in their own state’s plan. Compare plans and choose one that your family is comfortable with.
  • Explore tax advantages for your savings plan. The state that I live in, Indiana, generously offers a 20 percent tax credit on the first $5,000 I put into my children’s 529 plans. This means that I make an instant 20 percent on the first $5,000 that I contribute in any given year. Many states offer a tax credit for money saved in a 529 plan. Check with your local government and determine what tax benefits may be available to you.
  • Start small. The future costs of a college education could be overwhelming, and it’s easy to put saving off for another day. Start by making small monthly contributions to your child’s account. The sooner you start, the better, and small amounts can accumulate and grow tremendously over time. When we started saving for our children’s college education, we were still in debt. Since we were still getting our own act together, we started by contributing $25 per month per child. That amount has grown over time, but I’m still thankful that we started when we did.
  • Make savings automatic. Many online bank accounts will allow you to make your monthly contribution automatic. Set up an automatic savings plan and “set it and forget it.” Even small contributions can add up over time. This is especially true when money is saved automatically on a consistent basis.
  • Add gift money and found money to their accounts. Whenever my children get money for birthdays or holidays, it goes straight into their college savings accounts. This can often be several hundred dollars per year and is a great addition to the money we choose to save for them. Letting their gift money grow over the years is a great deal for kids and parents alike.
  • Ask family and friends to contribute. Make sure that family  and friends are aware of your child’s college savings account and encourage them to contribute in lieu of gifts. Of course, this may go over with some family members better than others. Still, there is nothing wrong with making people aware of your education savings goals. You may even find that family members actually want to contribute.

The thought of saving for college can be paralyzing, but it isn’t that hard to get started. Just remember that it doesn’t have to be “all or nothing.” Even if you are only able to save enough money to pay for part of their education, it’s still better than not saving anything at all. A huge commitment doesn’t need to be made, and setting up a 529 plan is usually easy and painless. Don’t let anything stand in your way and don’t get discouraged by statistics or scare tactics. Instead, channel your energy into your savings goals and enjoy watching your college fund grow.

What methods are you using to save for your children’s college education?


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