How Much to Save per Month for Children Who Aren’t Newborns?

April 14, 2021

Just because your child isn’t a newborn doesn’t mean you can’t start a college savings plan. But, if you got a late start on saving for college, how much should you save per month for older children? The rule of thumb for benchmarking progress towards the college savings goal can suggest how much more you’ll need to save per month.

The monthly contribution depends on the type of college, the age of the child (or the number of years until college enrollment) and the college savings goal.

Monthly College Savings for Newborn Children

The one-third rule suggests that you should aim to save about one-third of future college costs. Like any major expense, people spread out the cost of college over time. If you use an even split, then one third should come from past income (savings), one third from current income and financial aid, and one third from future income (loans).

Since college costs increase by about a factor a three over any 17-year period, and 3 x 1/3 = 1, this suggests that the college savings goal should be the full cost of a college education the year the child was born.

For a child born this year, that is the equivalent of saving \$250 a month from birth for a child who will enroll in an in-state 4-year public college, \$450 a month for a child who will enroll in an out-of-state 4-year public college, and \$550 a month for a child who will enroll in a 4-year private college.

Benchmarking Progress to College Savings Goal

You can benchmark your progress in saving for a child’s college education by multiplying the child’s age by \$3,000 for an in-state 4-year public college, \$5,000 for an out-of-state 4-year public college and \$7,000 for a 4-year private college. The difference between these figures and the actual college savings amount is the amount you should contribute as a lump sum now to catch up.

Monthly Contributions for Older Children

So, what if your child isn’t a newborn, and you don’t have any college savings? There is a simple way to ballpark how much the monthly contribution should increase for a late start in saving for college.

1. Use the benchmarking progress rule of thumb to calculate how much you should have already saved for college.
2. Divide this figure by the number of months remaining before college enrollment.
3. Add this to the monthly contribution from birth that was in effect the year the child was born to yield the new monthly contribution. (One can approximate the monthly contribution from birth using inflationary adjustments. Or, just use the current monthly contribution from birth.)

If you haven’t started saving for college, this chart shows how much you’ll need to save per month in order to save one third of future college costs at an in-state public college. It assumes 5% tuition inflation and rounds the contributions to the nearest multiple of \$10. The Age at Start column shows the age of the child now, assuming that you start saving for their college education now.

The monthly contribution increases much more rapidly when the child enters high school.

If you can’t save that much, save what you can. Every dollar you save is a dollar less you’ll have to borrow.

A good place to start:

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