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Best Ways to Start Saving for Your Kids’ College
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Best Ways to Start Saving for Your Kids’ College
A survey finds that 20% of parents of minor children haven’t started saving for their kids' college, but want to.
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11 years of experience Expertise Data analysis personal financeErin El Issa writes data-driven studies across personal finance topics. She loves numbers and aims to demystify data sets to help consumers improve their financial lives. Before becoming a Nerd in 2014, she worked as a tax accountant and freelance personal finance writer. Erin's work has been cited by The New York Times, CNBC, The Guardian, the "Today" show, Forbes and elsewhere. In her spare time, Erin reads and crochets voraciously and tries in vain to keep up with her two kids. She is based in Ann Arbor, Michigan.
Erin El Issa writes data-driven studies across personal finance topics. She loves numbers and aims to demystify data sets to help consumers improve their financial lives. Before becoming a Nerd in 2014, she worked as a tax accountant and freelance personal finance writer. Erin's work has been cited by The New York Times, CNBC, The Guardian, the "Today" show, Forbes and elsewhere. In her spare time, Erin reads and crochets voraciously and tries in vain to keep up with her two kids. She is based in Ann Arbor, Michigan. Published in Senior Writer & Content Strategist + more + more
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13 years of experience Expertise Brokerage accounts stock market cryptocurrencyChris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet.
Chris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet. Published in Managing Editor + more + moreRaising kids is expensive: On average, the expenses of one child from birth to age 17 add up to over $300,000, according to data from The Brookings Institution
Raising kids is expensive: On average, the expenses of one child from birth to age 17 add up to over $300,000, according to data from The Brookings Institution Brookings Institution. Future estimated annual expenditures of raising a child, assuming a higher inflation rate of 4 percent after 2020. Accessed Oct 4, 2025. . And that doesn’t even account for the massive expense of postsecondary education.A NerdWallet survey found that 1 in 5 parents of children under 18 (20%) haven’t started saving for their children’s college education, but want to. Here’s how to begin.
A NerdWallet survey found that 1 in 5 parents of children under 18 (20%) haven’t started saving for their children’s college education, but want to. Here’s how to begin.» Looking for a financial advisor? Search for one near you
» Looking for a financial advisor? » Looking for a financial advisor? » Looking for a financial advisor? Search for one near you1. Consider opening a tax-advantaged account
1. Consider opening a tax-advantaged accountOne such option is a 529 account, which is specifically designed to save for education expenses.
One such option is a 529 account, which is specifically designed to save for education expenses.A 529 plan allows your savings to grow tax-free, and some states even offer a tax deduction on your contributions.
A 529 plan allows your savings to grow tax-free, and some states even offer a tax deduction on your contributions.The downside of a 529 account is that if you withdraw the earnings for anything other than qualified education expenses, you will be penalized.
The downside of a 529 account is that if you withdraw the earnings for anything other than qualified education expenses, you will be penalized.You can change a 529 beneficiary to another member of the family, so if your child decides not to go to college, you can pay for qualified education expenses for another child or even yourself, but there’s the risk that you won’t need the funds for education at all.
You can change a 529 beneficiary to another member of the family, so if your child decides not to go to college, you can pay for qualified education expenses for another child or even yourself, but there’s the risk that you won’t need the funds for education at all.There are also limited investment options with a 529.
There are also limited investment options with a 529.Another savings option is a Roth IRA, which is traditionally used as a retirement account, with earnings that grow tax-free.
Another savings option is a Roth IRA , which is traditionally used as a retirement account, with earnings that grow tax-free.Contributions to a Roth IRA are limited to$7,500 for 2026 ($8,600 if aged 50 and older).
Contributions to a Roth IRA are limited to $7,500 for 2026 ($8,600 if aged 50 and older) $7,500 for 2026 ($8,600 if aged 50 and older) $7,500 for 2026 ($8,600 if aged 50 and older) .There are also income restrictions, and contributions can’t exceed earned income. So, unless your child earns money, you’ll likely have to use your own Roth IRA to save for your kid’s college.
There are also income restrictions, and contributions can’t exceed earned income. So, unless your child earns money, you’ll likely have to use your own Roth IRA to save for your kid’s college.Contributions to a Roth IRA can be withdrawn at any time, but earnings are usually subject to a penalty if you withdraw them before you turn 59 1/2.
Contributions to a Roth IRA can be withdrawn at any time, but earnings are usually subject to a penalty if you withdraw them before you turn 59 1/2.If you made the first contribution to your Roth IRA at least five years before, you can also withdraw the growth for qualified education expenses.
If you made the first contribution to your Roth IRA at least five years before, you can also withdraw the growth for qualified education expenses.The benefit of using a Roth IRA over a 529 account is flexibility: If your child doesn’t go to college, you can leave the savings in the Roth IRA for your retirement. Also, you have more investment options.
The benefit of using a Roth IRA over a 529 account is flexibility: If your child doesn’t go to college, you can leave the savings in the Roth IRA for your retirement. Also, you have more investment options.» MORE: Learn how Trump accounts work
» MORE: » MORE: » MORE: Learn how Trump accounts work2. Start putting something away consistently, no matter how much
2. Start putting something away consistently, no matter how muchThe average tuition cost at a public four-year in-state university is $11,610 and $43,350 for private nonprofit colleges, according to the College Board
The average tuition cost at a public four-year in-state university is $11,610 and $43,350 for private nonprofit colleges, according to the College Board College Board. Trends in College Pricing: Highlights. Accessed Oct 4, 2025. . If your child is young, this will likely be much higher when they’re ready for college. Costs will be higher still if they don’t live at home and need to pay for room and board.It can be overwhelming to think about how much your child will need to pay for college, but the best thing you can give your money is time to grow. That means putting some money away on a regular basis even if it feels like a drop in the bucket and starting as soon as possible.
It can be overwhelming to think about how much your child will need to pay for college, but the best thing you can give your money is time to grow. That means putting some money away on a regular basis even if it feels like a drop in the bucket and starting as soon as possible.Let’s say you deposit an initial $200, then save $50 per month from birth through age 18. By the end of that time, you’ve contributed $11,000, but when you include modest investment returns of 5%, you’ll actually have $18,025 saved. That may not be enough to cover four years of college, but it makes an impact. And that’s assuming your savings rate doesn't increase.
Let’s say you deposit an initial $200, then save $50 per month from birth through age 18. By the end of that time, you’ve contributed $11,000, but when you include modest investment returns of 5%, you’ll actually have $18,025 saved. That may not be enough to cover four years of college, but it makes an impact. And that’s assuming your savings rate doesn't increase.You can use an investment return calculator to see how college savings can grow over time.
You can use an investment return calculator to see how college savings can grow over time.» MORE: How to gift 529 contributions
» MORE: » MORE: » MORE: How to gift 529 contributions3. Make a plan for extra money in your budget
3. Make a plan for extra money in your budgetOver time, you may find extra money in your budget that could boost college savings, such as a tax refund or merit raise. Child care costs will also likely diminish or go away as your child ages, lowering your fixed expenses. Make a plan early to use some of these funds to save more for college.
Over time, you may find extra money in your budget that could boost college savings, such as a tax refund or merit raise. Child care costs will also likely diminish or go away as your child ages, lowering your fixed expenses. Make a plan early to use some of these funds to save more for college.Perhaps you want to put one-quarter of any windfall into college savings, or you decide to reallocate funds that previously went toward child care into their 529. The details don't matter, but you'll want to make these plans before the money is in hand. Otherwise, extra funds have a way of allocating themselves.
Perhaps you want to put one-quarter of any windfall into college savings, or you decide to reallocate funds that previously went toward child care into their 529. The details don't matter, but you'll want to make these plans before the money is in hand. Otherwise, extra funds have a way of allocating themselves.» MORE: 529 contribution limits by state
» MORE: » MORE: » MORE: 529 contribution limits by state4. Don’t compromise your retirement for college savings
4. Don’t compromise your retirement for college savingsThe NerdWallet survey found that nearly 3 in 10 parents of children under 18 who have personal student loan debt (29%) prioritize saving for their kids’ education over saving for retirement. Although it makes sense that parents want to keep student loan debt from burdening their children, retirement savings may need to come first. Student loans are an option if your child needs them, but you can’t take out loans to cover your expenses in retirement.
The NerdWallet survey found that nearly 3 in 10 parents of children under 18 who have personal student loan debt (29%) prioritize saving for their kids’ education over saving for retirement. Although it makes sense that parents want to keep student loan debt from burdening their children, retirement savings may need to come first. Student loans are an option if your child needs them, but you can’t take out loans to cover your expenses in retirement.» MORE: How a Coverdell account works
» MORE: » MORE: » MORE: How a Coverdell account works Advertisement1
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5. Look into ways to cut costs before applications startYou don’t need to wait until your teenager's junior year of high school to start thinking about how to keep college costs reasonable. Talk to your child early about how much you can afford to contribute to their education and the steps they can take to limit student loan debt. This could mean starting out at a two-year college, choosing an in-state school and applying for scholarships.
You don’t need to wait until your teenager's junior year of high school to start thinking about how to keep college costs reasonable. Talk to your child early about how much you can afford to contribute to their education and the steps they can take to limit student loan debt. This could mean starting out at a two-year college, choosing an in-state school and applying for scholarships.ON THIS PAGE
1. Consider opening a tax-advantaged account 1. Consider opening a tax-advantaged account 2. Start putting something away consistently, no matter how much 2. Start putting something away consistently, no matter how much 3. Make a plan for extra money in your budget 3. Make a plan for extra money in your budget 4. Don’t compromise your retirement for college savings 4. Don’t compromise your retirement for college savings 5. Look into ways to cut costs before applications start 5. Look into ways to cut costs before applications startON THIS PAGE
1. Consider opening a tax-advantaged account 1. Consider opening a tax-advantaged account 2. Start putting something away consistently, no matter how much 2. Start putting something away consistently, no matter how much 3. Make a plan for extra money in your budget 3. Make a plan for extra money in your budget 4. Don’t compromise your retirement for college savings 4. Don’t compromise your retirement for college savings 5. Look into ways to cut costs before applications start 5. Look into ways to cut costs before applications start More like this Investment Basics Investing How Much Does a Financial Advisor Cost? Most financial advisors charge based on how much money they manage for you. Fees are typically 1% a year but can be lower. Taryn Phaneuf Do You Need a Financial Advisor? 7 Ways to Tell You may need a financial advisor if you're facing big life changes, don't have financial goals, have complex compensation, high tax bills or for other reasons. Taryn Phaneuf How to Find Cheap or Free Financial Advice Quality financial advice is more accessible than ever — and much of it is free or inexpensive. Here's how to get it. June Sham 3 Steps to Prepare for Your First Financial Advisor Meeting Here's what think about and bring to your first meeting with a financial advisor. June ShamGet matched to a financial advisor for free with NerdWallet Advisors Match.
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