Of all the things you'll spend money on for your child (think food, clothing, and summer camp), college is likely to be the most expensive by far. Given the average cost of college today, it's important to start saving as early as possible. Ideally, you should start putting money aside on a monthly basis from the moment your child is born, if not before. The more time you give yourself to save, the better your chances of footing those hefty bills by the time your child leaves home to pursue a degree.

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Are you saving enough?

First, let's get one thing straight: Given the outrageous cost of college these days, we don't all have the ability to pay for our kids' education in full. If you have multiple children, or if your child is intent on attending a private school, then you may be unable to cover all of their school-related expenses.

That said, if you're hoping to make a sizable dent in those tuition bills, start saving as early as you possibly can. The average American family currently has an estimated $16,380 saved for college, but these days, that may not go very far.

During the 2015-2016 school year, the average cost of college tuition was:

  • $9,410 for a public four-year in-state college
  • $23,893 for a public four-year out-of-state school
  • $32,405 for a private nonprofit four-year college 

If those numbers look scary, then get ready for an even bigger shock. Here's what college cost on average during the 2015-2016 school year when you throw room and board into the mix:

  • $19,548 for a public four-year in-state college
  • $34,031 for a public four-year out-of-state college
  • $43,921 for a private nonprofit four-year college 

If you're hoping to tackle the cost of college, you'll need to formulate a plan while your child is still young.

Planning for college

Figuring out exactly how much to save for college can be tricky, so if you're not sure where to begin, this handy calculator can help:


* Calculator is for estimation purposes only, and is not financial planning or advice. As with any tool, it is only as accurate as the assumptions it makes and the data it has, and should not be relied on as a substitute for a financial advisor or a tax professional.

This calculator factors in your child's current age, your current savings balance, the amount you're saving or plan to save each month, and your anticipated average return in order to show you where you stand and how likely you are to meet your goals.

Let's say your child is 5 years old and you already have $5,000 saved. Let's also assume that you're planning to save $500 a month from this point on, and you'll invest your savings to generate an average annual 5% return. Using these assumptions, you'll have about $120,000 by the time your child turns 18. However, if you wait five years to start saving that $500 a month, then your ending balance will drop to just $66,000 -- a respectable sum, but only about half of what you'd have by starting earlier.

Save wisely

While saving for college early on is an important piece of the puzzle, you also need to think about where you're putting your savings. According to Fidelity Investments, only 41% of families saving for college use 529 plans to help meet their goals. The benefit of these dedicated college savings plans is that they allow your money to grow on a tax-deferred basis, and they tend to offer significantly higher returns than standard savings accounts. If you're not thrilled with the idea of a 529 plan, then there are other options to consider, such as a Roth IRA, municipal bonds (whose interest is tax-free), or even a traditional, non-tax-advantaged investment account. But if you keep your college fund in a standard savings account, then you might come up short when college rolls around.

The following table shows how much money you can accumulate by saving $500 a month based on when you start and how you invest:

Years to Save

Ending Balance (with a 1% average annual return)

Ending Balance (with a 5% average annual return)













Table and calculations by author.

Notice the difference between giving yourself five years to save versus 15, and earning 1% on your money as opposed to 5%. It just goes to show that if you plan accordingly, you do stand a pretty good chance of paying for college in full.

Of course, we can't all part with $500 a month, and even if you can, you may need to split that contribution among several children, in which case you'll have less money to spend per kid. But no matter how much you're able to save, the key is to start early and invest wisely. With any luck, you'll have a lot more options when the time comes to start filling out those college applications.