Strategies for saving money and paying for college

Purchase zero coupon bonds strategically

These bonds are issued at a discount from their face value. After a specified maturity date the bond can be redeemed for the full face value. You will need to make sure that the maturity date is before the time when you need to use it for college. But these are relatively safe investments, and if you plan correctly you can have bonds mature at each year in which the tuition bills are due.

Saving Money Every Day

Cutting your family expenses means more money that you can save and invest. As the parent of a college-bound student you should be ruthless in your quest to cut family expenses to free up money to save.

Don't ever think that it's too late to start saving Given a choice, it is better to start saving for college when your child is 5 instead of 18. But don't throw up your hands in despair even if you have only a year or less to save. Because things like financial aid and scholarships are unpredictable, whatever you can save may be just enough to fill a critical gap.

Also, every dollar you save could mean one less dollar you have to borrow. This will save you a lot of money in interest payments. When you think about it, each dollar you save is actually worth a lot more if it helps you borrow less. So no matter how soon you have to pay the first tuition bill, start saving money today. One last benefit to saving early is that you also begin to train your family to live on less. Parents supporting a child in college can attest to the personal sacrifices they make. If you can learn to live on less now then these sacrifices won't seem as difficult.

Identify and eliminate the non-essential luxuries

For many families the key to saving money is to cut unnecessary expenses. Here is a great exercise. Record for an entire month how much you spend. Write down every dollar you spend from food, to clothes, to going to the movies. At the end of the month add up what's on your list. Where is your money going? What expenses are non-essential or luxuries? Do you really need that US Dollars 3 cappuccino when you could make it at home instead? Does your family need to eat out that often? It may seem trivial but I bet you can find more than spare change to save when you carefully examine how your family spends its money.

Put off the big purchases, if you can

Instead of buying a new car, push the old one a few more years. Sure a new kitchen would be nice but so would Johnny graduating without your having to take out a second mortgage. Remember too that big purchases also have long-term consequences. The new car will saddle you with higher insurance payments. Remodeling the bathroom may force you to take out a home equity loan. As long as the purchases are not essential, consider putting them off until after your child graduates from college.