Put the 1-2-3 approach into action
1. Open a dedicated savings account for your student’s education.
This can be a traditional savings account at your bank or credit union, a goal-based savings account, or a money market account. Add to it when you can. Don’t forget to set aside extra cash like holiday gifts or your income tax refund. You can also save in a certificate of deposit, but once you’ve opened one you may not be able to add to it until the funds mature.
2. Make regular contributions.
Grow your college savings by making regular contributions instead of only when you can. This is one of the most reliable methods for growing your money. Consider setting up auto debit from your paycheck or your savings/checking account so there’s one less thing you have to remember.
3. Explore tax-advantaged options.
Once you’re comfortable putting money away for college, it’s time to consider a tax–advantaged college savings plan like a Coverdell ESA, UGMA/UTMA, or 529 plan. Check to see if they offer tax benefits—including tax-deferred earnings and qualified withdrawals that are tax exempt—that can boost your savings even more.