How Much Should You Save for College?
Let's put a number on how much it could cost, and how much you might need to save.
Saving for college is a daunting task. One of the difficulties is coming up with a reasonable estimate of what it will cost by the time your child is ready. There are other unknowns, too, like, how much help can you count on from the markets between now and the time your child is 18? How much will you need to set aside every year?
Let's say you have a new baby in your family. (Congratulations!) You received $5,000 in cash as gifts from very generous friends and relatives, and you used it to start a 529 college savings plan account. (How very prudent of you.) Let's say you want to save enough to cover four years of tuition and room and board for your bundle of joy at an in-state public school. How much should you aim to save every year make this goal a reality someday?