Haven't worked out a savings plan for your child's college education? You're not alone.

Most American families don't have a plan for paying for their kid's college education. Only 48% of people have saved for their child's college education according to a 2015 survey by Sallie Mae, even though 9 out of 10 families agree that college education is important.

Saving for college isn't a science anymore. College costs go up every year, and most savings plans don't make you a lot of money, which means you're saving to pay for a cost that is as-yet undetermined.

How exactly can you do that?

Before trying to save for your kid's college, here are 7 things to consider:

1. Talk to your child

Do your children expect you to pay for their college education? Bring them into the conversation early on. Going to college is not mandatory, and if you cannot afford to pay for it, yet they want to go, they should be prepared to work hard for it.

After having paid for your child for 18 years, there is no compulsion on you to continue to support them. Instead of breaking this to them in high school, start talking to them about their aspirations early on.

If your child is passionate about going to a college, suggest they get a part-time job to help set money aside. Many colleges also have financial aid packages, as well as scholarships, so your child should learn all about their options ahead of time.

Also ask them to consider cheaper colleges, and even community colleges, instead of the most prestigious schools in the country.

2. Consider paying off your house

Have a mortgage? Instead of putting money aside for college, pay that off first. Paying off your house will bring you mental peace and financial stability that you will be grateful for in your twilight years.

Before you start putting money into a college fund, consider how much faster you can pay off your mortgage if you use the money for that instead. Being able to pay your house off 5 or 10 years ahead of plan could help improve your quality of life, and your child will always have other options for college funding.

3. Save for your retirement

Don't spend money that could go into your retirement fund on college just yet. Your child will have options besides you when it comes to funding their college education. However, you only have yourself when saving for your retirement.

Be sure to understand the limits that you can contribute to your retirement accounts. Included below is an excerpt from a blog post on the Cook Martin website:

Pretax Retirement Plans

  • The elective deferral limit increased from $17,500 to $18,000.

  • The catch-up contribution limit for employees aged 50 and over increased from $5,500 to $6,000.


  • The contribution limit for an IRA remains unchanged at $5,500.

  • The additional catch-up contribution remains unchanged at $1,000.

Traditional IRA

For Individuals Covered by a Workplace Plan

  • The deduction for individuals making contributions to a traditional IRA, who are covered by a workplace retirement plan, is phased out for single individuals with a modified adjusted gross income (AGI) of $61,000 and individuals claiming head of household with a modified AGI of $71,000. For individuals claiming married filing jointly, the income phase-out is $98,000 to $118,000.

Spouse Covered by a Workplace Plan

  • For an individual who is not covered by a workplace retirement plan, but their spouse is, the income phase-out is between $183,000 and $193,000. However, there is no adjustment for inflation for a married individual filing separately, the phase-out range remains $0 to $10,000.

Roth IRA

  • For individuals making contributions to a Roth IRA, the income phase-out is $183,000 to $193,000 for married couples filing jointly, and $116,000 to $131,000 for single individuals, and those claiming head of household. The phase-out range remains $0 to $10,000 for married individuals filing separately.

Your retirement is no longer guaranteed, and you don't have the luxury of depending on your 401K or social security to get you through your post-retirement years.

As you plan out your finances, prioritize saving for your retirement first. Before you start putting money into a college fund, make sure you have made enough contributions to your retirement fund first.

4. Have adequate life insurance

Do you have adequate life insurance? Premiums are high and if you're also putting money away for college chances are you don't have enough life insurance for yourself and your spouse.

Diverting funds from a college education to your own life insurance is one way to ensure your kids will have you around for a long time, and that you will have a nest egg to look forward to in your future.

5. Diversify your investments

Similar to other things we've mentioned earlier, but distinct enough to be mentioned separately, are your investment funds. When you're putting money away for college, you're going to be unable to consider multiple investment avenues. However, once you stop putting money into a college fund, you should be able to explore different investments so you can build a diverse portfolio and guarantee a stable retirement.

6. Set your child up with a savings account

Share financial responsibility for college education with your child early on. Set up a savings account for them when they are young, and help them save a portion of all the money they get from family and any part-time jobs they have.

Starting kids early with a savings account is a great way to make them more financially responsible. They will start to understand the value of money, as well as begin to understand how hard it would be for you to fund their entire education.

More so, kids will start to look for ways to boost their savings, and may consider the important of good grades or a sports scholarship if they know they are responsible for their own college education.

7. Show them the world

Jeff Bogle, of Out With the Kids, talked about how he and his wife stopped saving for their daughter's college education and instead started spending that same money on enriching her life. They travelled, introduced her to art, cooking, music and basically exposed their children to experiences they wouldn't have been able to have otherwise.

"The goal is for them to be cultured, to have experiences, to see the country and the world, and for us to do it all together," Bogle says.

As you can see, there are plenty of ways you can use the money intended for college in other ways.

What other innovative way can you think of?

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