The Secret to College Savings: Tips for Self-Employed Parents

By Erin Ollila, Contributor, on February 7, 2018

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I care a lot about my children’s educations, and building up their college savings while they’re still young is one of my main priorities. I want them to be able to focus on their studies, friendships and life experiences, and not worry about how or when they’ll be able to repay their loans. I don’t want them to skip out on the best college for them just because the price tag is higher than another school.

But saving for college as an independent professional with variable income isn’t easy. There’s no set salary, and money comes in randomly and over time instead of in a trusted, regular, bi-weekly paycheck. While managing our money may take a bit more finesse, saving for college is absolutely within our reach.

Track Your Spending and Expenses

Saving for the future takes careful planning. If you’re not hiring a finance professional to help you, you need to be able to track and measure where you currently stand financially before taking any steps to adjust your funds. Track your expenses over the course of at least three months to see how you spend personally and professionally.

Pay attention to both fixed and flexible expenses. Your fixed expenses may be the cost of rent (personal) or quarterly taxes (professional). Don’t skimp on the information about your flexible spending, either. In fact, you may want to pay even closer attention here. Personal flexible expenses include trips to the coffee shop or getting your nails done, while professional flex expenses may include digital subscriptions or over-ordered inventory.

Make Adjustments

Once you’ve analyzed your money situation, you can determine the expenses that can be cut or reallocated to help you plan for the future. Then, you can use that money for savings. But if you don’t have any excess expenses, you might find that you don’t have enough to move into a college account. Don’t let that hold you back. Find a way to earn more, even if it’s a one-time cash infusion, like offering mini-sessions one weekend if you’re a photographer or increasing your overall pricing structure for current and future clients.

Get Uncomfortable With Your Savings

I’m slightly obsessed with saving. I like watching my money grow and making specific life choices so I can continue to invest money toward my goals. But when I first dug myself out of light debt and started saving, it was super uncomfortable. It’s the little reminders of savings that force you to really question your money mindset.

I hated going to restaurants and choosing the lower cost option out of my two favorite choices just to save five dollars. But those five bucks in my account grew over time, and the more I continued making similar decisions (and, you know, stopped dining out so frequently), the bigger my balance got. My mindset switched from “these few dollars will never amount to anything” to “how can I cut as many extraneous purchases as possible and save that money?” Suddenly, saving became exciting. If you’re unsure how to start, try cutting the little purchases first.

Put a Percentage of All Your Income in Savings

The biggest stumbling block most freelancers and independent professionals face in saving is their variable income. Unlike traditional employees who expect a bi-weekly paycheck, indys have fluid payments and may not know when to expect one at all. It’s impossible to follow the advice of putting X amount of your monthly income aside, because the amount you bring in is often different every month. Instead, make it a priority to allocate a percentage of every paycheck to your savings.

As soon as I got my first job, my mother recommended I take 10 percent of every paycheck and put it in an untouchable savings account. (I can’t tell you how much I wish I actually took her advice at that age). If you don’t know where to start, listen to my mother. Put aside 10 percent of everything you earn, and yes, that means everything from those random $20 payments to the big clients that pay you $5,000 every month. It doesn’t matter whether you’re putting aside $2 or $500. This money is all working toward your goal of building your children’s college savings accounts.

Can you attempt a 50/30/20 division of the money you make? Some financial advisers suggest living off 50 percent of your money while saving 20 percent, and allocating the remaining 30 percent to flexible expenses. Increasing the percentage you save means more money for school later.

Involve Your Children

There are no rules for how to approach college savings. First, accept that you don’t have to save a penny if you can’t or don’t want to. But I’m guessing you do, which is why you’re still reading. Remember that you deserve a little help with this huge task, so teach your children about the importance of saving by allowing them to contribute to the college fund.

Include your kids by talking about what they want to be when they grow up and finding a way to monetize it. An older child may be able to use their experience to bring in some money. For example, your child could give piano lessons or tutor other children in a certain subject. Decide ahead of time how much money they’ll get to keep and how much will get deposited into their college savings account.

Don’t let the fear of not having enough money put aside for your children’s schooling hold you back. Take the pressure off yourself and put aside anything you can. Even if you can pay 50 percent of your child’s overall education with your savings, you’re still helping them avoid hefty loans. Remember that every dollar counts.

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