How to Start Saving for College

College Savings Mar 1, 2019

So, you’ve decided to start saving for college – but you’re faced with an overwhelming number of complex options, account types, tax considerations. Isn’t there a simpler way?

Yes. At CollegeBacker, we help families through this process every day. Here’s a simple, five step process to start saving for college:

  1. Learn about the best way to save, a 529 College Savings Plan.
  2. Select the right 529, depending on your state of residency.
  3. Choose an investment portfolio.
  4. Set a savings goal.
  5. Invite your family & friends.

Okay. Let’s get started!

1. Learn about the best way to save

Have you heard of a 529 College Savings Plan? 7 in 10 parents haven’t, but we’ll let you in on a little secret: A 529 College Savings Plan can help your savings go farther. It’s a tax-advantaged investment account that works like a Roth IRA, with tax-free growth and tax-free withdrawals.

2. Select the right 529

Every state has their own 529 plan, but you are not required to use the plan offered by your state. This means you have a lot of options – but it doesn’t have to be complicated.

At CollegeBacker, we can help you choose the right one for your family’s situation, but here are a few guidelines if you’re doing the research yourself:

  • Check if your state offers an income tax deduction for using your state’s plan. If so, take advantage of it, but also remember that you can have multiple 529s if there are other things you don’t like about your state’s 529.
  • Compare the fees and investment portfolio options. You’re looking for a low-fee plan that has an age-adjusting portfolio option. More on this next.
  • Make sure it’s easy for you (and your family) to use. It doesn’t need to be flashy, but if you want to get the grandparents involved, make it easy for them!

3. Choose an investment portfolio

If you’re a sophisticated investor who loves tracking markets, you might be excited about choosing the most esoteric investment option on the list. For most families, a passively invested, age-adjusting portfolio is a perfect fit.

What is that, exactly? In short, these portfolios have lower fees because there is no fund manager tweaking investments on a daily basis (instead, it’s “passive”). Even so, the investments adjust over time based on the age of your child, which means it is higher growth when your child is young, and lower risk as your child approaches college age.

4. Set a savings goal

The best monthly savings goal is the one you’ll stick to, so choose something that’s reasonable for your budget. For many families, this is about 10% of discretionary income.1

When determining your end goal, shoot for saving 1/3 the projected cost of college. Why? The remaining two-thirds can be filled in by scholarships, financial aid, and current income, from the parent or student.

5. Invite your family & friends

Even after doing all this work, you may still find that there’s a gap between how much you can save individually and how much you want to provide for your child.

Luckily, there is a whole community of people who want to help, and many occasions for them to do so: Birthday parties, holidays, early graduations and other milestones.

Anyone is allowed to contribute to anyone else’s 529 College Savings Plan. The contribution process will differ from plan to plan, but CollegeBacker can provide the tools to easily send invitations or share a personalized page to collect contributions.

Saving for college can be a daunting task, but you don’t have to go it alone. CollegeBacker can walk you through each of these steps, and soon you’ll have a community of support around you!

See the Lumina Foundation’s paper on the Rule of 10. ↩



Backer is a social savings platform that helps people create tax-free 529 accounts for their children, provides investment guidance, and allows family and friends to contribute with ease.

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