Would you believe that you can turn $1 into $10,000 for college?
This is not a Ponzi scheme or a bet on Bitcoin, but rather a rule of thumb based on the fundamentals of saving for college.
Saving a dollar a day can yield $10,000 for your child’s college education.
How It Works
Let’s consider the details behind how this idea works.
There are 6,205 days in the 17 years from birth to college enrollment, based on multiplying 17 and 365.
But, what about leap years? Leap years add an extra day every four years, except possibly for century years. That’s about an extra 4 days over any 17-year period. So, the total is actually 6,209 days, if you count an extra day for each leap year.
If you save $1 a day from the day a child is born for 17 years, you will contribute a total of $6,209 to their 529 college savings plan.
The rest of the money comes from earnings. If you earn an average 5% return on investment, the total saved will be $9,788, with more than a third of the total coming from earnings.
That’s close enough to $10,000. Or, if you must, assume a 5.22% annual return on investment to get the total the rest of the way there.
Can You Spare Some Change?
Just a dollar a day gets you an extra $10,000 for college.
Surely you can find a dollar to help your child go to college?
A dozen ideas will help you save a dollar a day.
- Round up your purchases to the nearest dollar, and save the spare change.
- Find a dollar in the cushions of your sofa.
- Pay with cash instead of credit.
- Pay bills on time to avoid late fees.
- Pick up purchases from stores in person, instead of having them delivered.
- Increase the deductible on your car insurance and renter’s or homeowner’s insurance.
- Shop with coupons at the grocery store. Take advantage of mail-in rebates instead of ignoring them. Buy generic instead of brand-name products. Eat a snack or a full meal before going grocery shopping. Never shop hungry.
- Eat spaghetti every Sunday instead of more expensive meals.
- Drop your gym membership. You’re never going to go, anyway.
- Replace incandescent light bulbs with energy efficient CFL or LED bulbs. Set your thermostat a few degrees higher in the summer and lower in the winter. Replace or vacuum your furnace filter once a quarter. Reduce the temperature on your hot water heater.
- Carpool to save on gas.
- Drink water instead of coffee or soda.