The best parents dream of giving their child the best opportunities in life. It is quite inarguable that this equates to a good education. However, with the rising costs of college every year, saving for one’s education seems impossible, much less a child’s. For black and POC households, things become even harder due to systematic financial barriers and disparities in wealth.

The good news? With proper planning and commitment, you can build a stable financial foundation for your child’s future. No matter whether your child is in toddlerhood or adolescence, below is a step-by-step process to equip you for his/her educational life.

1. Start Now

The earlier you start saving for your child’s education, the better! If your child is wearing diapers right now, small amounts of money today can reap benefits much later. The earlier you start, the more time your money has to compound and grow.

Let’s bring it down to fundamentals with a simple example:

If you start saving $50 per month when your child is born, by age 18 you’ll have accumulated $10,800.

And due to compounding interest (with an estimated average return of 6%), your savings account could swell to over $19,000.

Aim to beat factors like inflation and recession through some investment strategies.

Have an older child? Don’t worry — too late doesn’t exist when it comes to saving. Even being able to save money on a month-to-month basis can reduce that student loan requirement.

2. Open a 529 College Savings Plan

A 529 plan is a better option to save for college because it offers tax-free growth and tax-free withdrawals when used for educational expenses. Even states offer a tax deduction or credit for contributions.

Benefits of a 529 Plan:

• Money grows tax-free when used for educational expenses.

• Anyone can contribute (parents, grandparents, aunts, uncles, etc.).

• Funds can be used for tuition, books, and even some housing costs.

Many middle and lower class families are unaware of 529 plans or think they are only for the wealthy. But the truth is, any family can open one with as little as $25 in some states.

3. Consider a Custodial Account (UTMA/UGMA)

If you’d like more leeway in how the funds are spent, a UTMA or UGMA custodial account may be a suitable choice.

Not having the limitation that 529 plans have on using the funds for education costs, the child has complete control of the money when they become an adult (typically 18 or 21, by state law).

This is best for:

• Parents who desire flexibility (money can be spent on anything, not only school).

• Families that are unsure whether their child will go to college.

4. Scholarships and Grants

Saving is valuable, but free money is even better! Thousands of scholarships exist, many exclusively for African American students.

Where to Find Scholarships:

• UNCF (United Negro College Fund) – www.uncf.org

• Thurgood Marshall College Fund – www.tmcf.org

• Scholarships.com – www.scholarships.com

• Fastweb – www.fastweb.com

Get your child to apply for as many scholarships as possible. Even the small ones can make a difference and reduce the number of student loans they will have to take.

5. Teach Your Kids About Money

One of the best things that you can give your child is financial knowledge. Teaching them budgeting, saving, and investing will pay them well when they are in college and beyond.

Simple ways to teach finance to kids:

• Give them an allowance and teach them about budgeting.

• Get them a savings account in their name and make them save part of any money they get.

• Teach them about credit so they don’t fall into debt traps later on.

There are also great apps like Greenlight and BusyKid that make learning about money an enjoyable experience for children.

6. Involve Family and Friends

Family and community mean a lot to African American families. Rather than clothes or toys, ask relatives to contribute to your child’s education fund during holidays and birthdays.

Certain 529 plans also facilitate crowdfunding, so friends and relatives can directly make contributions. Consider this: if 10 relatives each chipped in $50 annually—that’s another $500 saved!

7. Check out HBCUs and Community Colleges

Historically Black Colleges and Universities (HBCUs) are a great option as they generally have more scholarship offers and an integrated community of fellow Black students. The majority of HBCUs also have lesser tuition charges than other institutions of higher education.

Another smart plan? Starting at a community college and transferring later to a four-year college. This could save you thousands of dollars in fees and tuition.

8. Avoid Debt

While student loans are great, borrowing too much can be a costly burden around your neck for decades. If you do need to borrow money, pay back federal student loans first followed by private ones since they have less interest and more flexible repayment options.

Pro Tip: Encourage your child to work part-time while in college to help pay expenses and reduce loan requirements.

9. Take Advantage of Employer Benefits

If you or your spouse are employed by an employer that offers tuition benefits, be sure to take full advantage of it. Some employers even offer scholarships for the children of employees.

Ask your HR department to find out what benefits are available.

Conclusion 

Saving for your child’s education does not have to be a big task, it’s 100% possible with the right plan. Whether you start with a 529 plan, scholarships, or gifts from relatives, it all adds up.

Remember, the best investment that you can make is in your child’s future. Start saving today, be consistent, and see how your savings add up!