How to Save $40,000 for College With Almost No Effort
If you really want to scare a parent, mention the cost of college. Four years of room, board, and fees at private, non-profit colleges cost an average of $134,600 in 2015, according to Saving for College – more than you’d spend on a house in some parts of the country. By the time today’s babies are heading off to campus, the same four-year degree will cost $323,900. Public colleges are cheaper, but still eye-poppingly expensive. A degree from a public in-state university will cost a little less than $100,000 by 2033.
Despite the crushing expense, roughly half of parents want to cover at least 75% of their children’s college costs, the Annual College Savings Survey found. Yet only a third are confident they’ll be able to do so. They’re right to be concerned, based on data about how much people actually have stashed away for their son or daughter’s education. The typical parent has a little over $16,000 saved for college, Sallie Mae found. That’s hardly chump change, but with tuition increases outpacing inflation, it’s a relative drop in the bucket.
Parents fail to save for college for a variety of reasons. Some worked their way through college and believe their child should do the same. Others might be counting on sports scholarships to cover the cost of a degree, even though only 2% of high school athletes manage to snag such a coveted prize, according to Lynn O’Shaughnessy of The College Solution. Many simply can’t afford to put money in a 529 plan. Faced with a mortgage, day-to-day expenses, debt payments, and funding a 401(k), plans to save for college fall by the wayside.
Not everyone is buying the “we can’t afford it” excuse, though. Liberty Bank for Savings ran some numbers and found that parents could potentially save tens of thousands of dollars for college if they gave up a few expensive habits. If you’re hoping to save more for college but can’t find the money, consider cutting these 10 costs from your budget. Cutting only a small handful can boost your savings to at least $40,000 over the long run.
Savings are based on the amount you would accrue in a 3% savings account over 18 years.
10. Family movie night
Potential savings: $9,703
A night at the movies might seem like a relatively cheap family outing, but the cost of tickets adds up fast. You’ll spend $413.28 every year if you take your family of four to the cinema once a month, and that’s assuming you skip the popcorn and soda. Pass on the latest blockbuster and opt for Netflix instead and you’ll save $9,703 over 18 years.
Potential savings: $10,142
Golf can be an expensive hobby. Hitting the links costs an average of $36 if you play at a public course. Even if you golf only once a month, it’s still costing you $432 annually. Skip the golf and save for college instead and you’ll have $10,142 by the time high school graduation rolls around.
Potential savings: $12,208
Bi-weekly manicures may seem like a small indulgence, but at $20 a pop, you’re spending $520 every year on your nails. To save, learn to DIY your manicures. Then, put that $20 you would have spent at the nail salon in a savings account every other week. After 18 years, you’d have $12,208 for college.
7. Wine and beer
Potential savings: $12,819 to $21,975
A glass of “mommy juice” may be a nice reward at the end of a trying day, but if you can give up the vino, you could make paying for a college a lot easier. A daily glass of wine costs $546 a year, assuming you’re spending the average of $8.98 per bottle of Sauvignon Blanc. Over 18 years, you’d save $12,819 by going booze-free.
Meanwhile, dads who pass on a night at the bar with their buddies could save even more. Going out for beers three times a week costs $936 per year, according to Liberty Bank for Savings. Save for college instead and you’d have $21,975 after 18 years (plus a much smaller beer gut).
Potential savings: $21,975
The typical American goes out for lunch twice a week and spends $10 each time, a survey by Visa found. If you pack a lunch instead, you’d save $936 every year, or $21,975 by the time your kid is ready to move into the dorms. If both parents work and put their lunch money in a 529 plan instead, the potential savings double.
Potential savings: $15,000 to $40,706
Giving up your daily Starbucks habit could generate more than $40,000 in savings for college, assuming you were buying one fancy drink per day at $4.75 a pop. Over a year, you’d save $1,733. Cutting out a daily small brewed coffee would generate a yearly savings of $675, or about $15,000 over 18 years.
4. Sporting events
Potential savings: $41,536
Attending a major league sporting event costs major bucks. If you wanted to bring your family of four to an NBA game, expect to pay $442.28 on tickets, food, and parking, according to Liberty Bank. Attend four games per year and you’d spend $1,769.12. Put that money into savings instead and you’d have $41,536 in 18 years.
3. Dinner out
Potential savings $48,103
Your weekly dinner date with your spouse might provide a much-needed break from the kids, but at what cost? Parents spend an average of $2,048 per year on kid-free meals. Choose a cheaper date night option and use the extra money to save for college instead. You’ll have $48,103 for tuition and books by the time your kids are grown.
Smoking is a costly habit. If you can give up cigarettes entirely, you might be able to save as much as $62,216 by the time your child turns 18, depending on how much your habit was costing you. Plus, quitting smoking means a healthier life for both you and your kids.
1. Family vacations
A summer vacation costs an average of $1,145 per person, according to American Express. For a family of four, that’s a yearly expense of nearly $5,000. If you decide to use the money you would have spent on vacation to save for college instead, you’d have $107,532 after 18 years.
Even if you’re not willing to forgo 18 years of vacations, you can still adjust your spending to save more. Budget for a fancy trip every other year, then look for cheaper getaways or plan a staycation for other years, and save the difference.