Her Two Cents

Depending on the calculator or chart you consult to determine how much you should be socking away for college, the answer can be downright horrifying.

Example: According to this chart from SavingForCollege.com, even if you send your child to public school and start at birth, you should be saving $432 per month. PER CHILD.

Heaven help you if you’re even contemplating a private university, in which case you should be siphoning off nearly $1,000 from birth for the privilege. (Isn’t that, in itself, an argument against sending your kids to a private school?)

But yesterday there was a New York Times story that made me breathe a little bit easier. Evidently Fidelity Investments put together their own estimates of what parents should be saving for college, based on income, financial aid estimates, and whether they’re leaning public or private.

And the answers are somewhat more reasonable.

• Making $50,000 a year? You should be saving $160 a month for a public school.
• Making $75,000? Save $190.
• Making $100,000? Save $250.

Thinking private? You should be saving $410, $410 or $460 a month, respectively.

Now, I’m not saying that $160 a month isn’t a chunk of change. But it’s certainly less daunting than $432 per month, and at 3.5% of household income, it seems like a number that might be within reach. Even the $250 per month is only 3% of income for the $100,000 family.

But frankly, the lesson in all this is simple: The earlier you start saving, the less you actually have to save every month. Right now, my husband and I are putting $100 a month into a 529 for our 17-month-old. If we do nothing else, and we earn about a 6% return on that money (hahahahaha, but humor me), we’ll have more than $35,000 by the time she’s ready to go to school.

No, it won’t cover all of her costs. But it’ll definitely help. And I’m sure if you asked her if she’d rather have a $35,000 head start or a $5,000 head start, she’d choose the former.

How are you handling college savings?

(Cartoon from drharoldland on Flickr.)