5 Ways to Start College Funds for the Kids While Paying Off Debts

A separate savings account is an excellent way to allocate resources to your child’s college education. Even if it’s just a few dollars a month, saving in a separate account shows growth and can motivate you to keep working toward your goal amount.

When you place all of your savings in one account and don’t differentiate for large projects, it can make it harder to see progress toward your goal and you’re more likely to spend the money on other things.

Some people choose to keep all of their money in one bank, while others open their child’s account somewhere else to further separate the funds.

You can try reducing your monthly payments to save more for your child’s future. Many utility companies — like water, gas, and electricity — offer budgets that reduce your monthly payment based on your income. You can often find this option online or by calling your local office. Getting on budgets can help you lower your utility costs to under 10% of your monthly income, freeing up funds for greater savings.

You can also lower your bills by staying mindful of your resource use. Fill your dishwasher or washer before running them. Turn off lights in rooms you’re not using and unplug unnecessary appliances.

Many homes have inefficient features that contribute to monthly costs. Some upgrades to your home might cost more upfront, but they will save you money down the line. For example, using a smart thermostat can save you between $100 to $150 per year, and replacing your windows can prevent you from losing as much as 30% of your home’s heat. The money that you save on those bills can be put right into your savings account.

Budgeting is an excellent skill to help confidently manage your finances. Setting a strict budget can help you pay off debt while still saving for your child.

There are many popular budget methods out there, but it ultimately comes down to figuring out your needs and wants and aligning them with your current income. Take your total monthly income and subtract your monthly expenses that can’t change, such as your mortgage, utilities, and any minimum debt payments. Then, subtract estimated monthly costs that could change, such as grocery and gas payments or a child’s clothing. All of these are your needs.

Your wants are the things you enjoy paying for but don’t need to keep you and your family comfortable. These include streaming subscriptions, dining out, vacations, and other nonessential purchases.

Once you figure out what you can adjust and what your remaining costs are each month, you can set aside an amount toward your kid’s college fund monthly or bi-monthly.

You might surprise yourself with the amount of money you save when you take a closer look at your spending habits. You want the best for your kids, but that doesn’t always mean purchasing the most expensive items on the shelf.

Many store-brand foods come from the same manufacturer as the name brands but cost much less. If not from the same manufacturer, many contain near-identical ingredient lists. Your family can find both practical and cute clothing options for a discount at second-hand stores. Thrift stores are often like a treasure hunt for kids, creating a fun experience while you save.

Look at any subscriptions you have and consider which ones your family actively uses and which could go away without much fuss. Though many streaming services compete by lowering their monthly costs, having multiple services adds up.

You can create an investment strategy to earn more money through passive income. If your kids are young, it might be worth learning about and investing in stocks. If you don’t have a retirement account, consider investing in an IRA, which earns you more than a savings account.

Real estate is another popular form of investment that can make you good money. With the right information, you can begin wholesaling for quick income or purchase a rental property that can give you a consistent flow. It’s always best to consult with a local expert before investing in real estate to give you the best chance at success.

Aside from financial investments, you could also invest time into a side hustle. Bringing in extra monthly income will allow you to live comfortably while paying debts and saving more money for your child’s future education.