Handbook: Preparing Your Child for College
How Can I Save $10,000 For College?
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CHART |
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Amount Available When Child Begins College |
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| If you start saving when your child is | Number of years of saving | Approximate monthly savings | Principal | Interest earned | Total savings |
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(Assuming a 5 percent interest rate.) |
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| Newborn | 18 | $29 | $6,197 | $3,803 | $10,000 |
| Age 4 | 14 | 41 | 6,935 | 3,065 | 10,000 |
| Age 8 | 10 | 64 | 7,736 | 2,264 | 10,000 |
| Age 12 | 6 | 119 | 8,601 | 1,399 | 10,000 |
| Age 16 | 2 | 397 | 9,531 | 469 | 10,000 |
When deciding which type of savings or investment is right for you and your family, you should consider four features:
- Risk: The danger that the money you set aside could be worth less in the future.
- Return: The amount of money you earn on the savings instrument or investment through interest or dividends.
- Liquidity: How quickly you can gain
- Time Frame: The number of years you will need to save or invest.
When you select one or more savings or investments, you should balance these factors by minimizing the risk while maximizing the return on your money. You will also want to be sure that you will be able to access the money at the time you need to pay for your child's education.
If you start early enough, you may feel confident about making some long-term investments. Some investments are riskier than others but can help you earn more money over time. You can get more information on these access to the money in the instrument or and other savings instruments at local banks and at your investment. neighborhood library.
Don't forget that you won't necessarily have to save for the entire cost of college. The following section tells about student financial aid for which you and your child might qualify and other ways to keep college costs down.
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