Saving for your kids’ college education can be daunting but it’s not impossible. The key here is getting started. Whether it’s $5 or $500 just open a savings account for them and start! Trust me, it gets a lot more painful if you don’t.
There aren’t many solid guidelines on saving for college because costs vary so widely. In fact, Fidelity Investments found that nearly 70% of parents wished there were more specific guidelines on how much to save for college. There’s a lot of advice about plans (529 plans, UGMA and UTMA custodial accounts, etc.), but not about how much you should put away each month or what steps to take with your family budget.
I’m going to show you how I did it – how I built up 20 grand for my kids’ educations.
Find Out How Much You Can Contribute Monthly
The first thing you want to do is figure out what it will cost by using an investment calculator. This compound interest calculator will help. This calculator from investor.gov is pretty easy to use. The screenshots below are from the investor.gov calculator and they show how much $150 monthly contributions earn after 10 years at a reasonable rate of return. I used 4% in my calculation.
Below, you can see the returns for 2%, 4%, and 6% interest rates.
The lowest the yield is around $19,000 and the highest is $23,000. If your money is invested wisely, your return can be much higher.
If you have toddlers, the good news is that you can start as late as their eighth birthday to have this amount available when your 18 year-olds are getting ready for college. However, you’ll get best results when you start earlier and save more.
Fidelity Investments came up with a new rule-of-thumb recently as a guideline for estimating what you’ll need to save at different points in your child’s life. Multiply your child’s age by $2,000 to stay on track for covering half the average cost of a four-year public secondary school.
(Remember, you’ll need to account for more than just tuition. Don’t forget about housing costs, books, transportation, fees, spending money, and any other expense you can think of.)
Now I knew how much I needed to contribute. The next step was to see where it was going to come from.
Getting to $20,000
So, how did I save $20k for my kids so far? Here’s the breakdown:
- Opened brokerage savings accounts for my kids. There are several options, such as Uniform Transfer to Minors Account (UTMAs), 529 plans, IRAs, and money market accounts. Ally Invest (formerly TradeKing) offers custodial IRAs for minors and has low-commission trades on stocks. However, to keep things simple, we invest in ETFs (exchange traded funds.) Another option is to open an IRA in your name so your child’s financial aid is not impacted.
- Made my kids get jobs. They earn money in acting and entertainment that goes into their brokerage accounts. Once they pile up cash in these accounts, they log into their trading accounts and buy a few ETFs.
- Didn’t buy them unnecessary stuff. My kids pay for their own “must-haves” like iPhones or Air Jordans. If they aren’t buying something that makes money in some way, they pick up the tab.
- Asked relatives not to buy them non-essentials on holidays or special occasions. This was a little tough, but I requested that family give cash toward their college instead of toys, electronics, and other “luxury” items.
- Lived frugally. I made sure we paid off all our debt, so we don’t have a mortgage or other consumer debt. This way, I can funnel more money into their brokerage accounts. I know that debt is hard to avoid but it’s worth the struggle. Remember, the money you pay on interest is better spent
Final thoughts for saving for your kid’s college:
Now that you see how I did it, let me leave you with a few points that will make saving for your kids’ future easier:
- You have more sources for contribution than you may think. Include as many as you can to really build a nest egg. The main thing is to open that brokerage account and start making deposits!
- A big step in getting as much saved as possible is to find ways to live frugally.
- Find ways for your kids to contribute to their own education. (They might resist but teaching them to save is always a good lesson.)
Interested in debt-free college? Check out my free guide on how to obtain a debt-free college education!
Free Guide: Debt Free College Degree

A debt-free college education is possible. Check all the ways you can go to college WITHOUT pesky student loans.
This is AWESOME! That’s pretty much two years of community college and two years of state college already paid for. They could even go to a private school if you combined that with scholarships and work study. Such an inspiration! I hope I can save as much for my son by the time he’s headed off.