If you already have disposable income left over at the end of each month that can be used to pay college expenses, then you are off to a good start.
If there is no money left over after you pay the monthly bills, don’t despair. Many parents are surprised at the amount of cash flow that materializes when a child leaves for college.
Take time to carefully review all the expenses in your household budget that will be – or can be – reduced or eliminated when your child goes off to college.
Q & A
Where do parents find savings when a child leaves for college?
You will find savings in many areas. Here are some examples:
Food – Your grocery bill will go down and it might go down a lot if the student is a boy.
Electricity – When computers, cell phones, iPads, TV’s and Xboxes are not constantly charging, you will see some savings.
Gas – How often do you pay for gas for your children?
Car Insurance – When your child goes to college, you may be able to switch to occasional driver status and save quite a bit of money.
Activities – Do you presently pay for coaches, lessons or tutors?
Lifestyle – Review all remaining expenses with an eye for savings. For instance, can you take less expensive vacations, reduce the number of times you eat out in restaurants or downgrade your cable TV package?
What is the best way to use this “found money” to pay college costs?
The answer to this question will vary from family to family. Your overall payment strategy will determine how you use the extra cash flow.
Some families will opt to increase the amount that they pay through the interest free monthly payment plans offered by most schools. An extra $200 a month in “found money” will allow you to pay an additional $2,000 through a typical 10-month payment plan.
Whatever you decide, a careful review of household expenses will likely yield some additional funding for college. By understanding all your college payment options, you can make good use of small amounts of monthly savings.