Daily Money Tip: Engage children in college saving process

When it comes to paying for college, don't shield your children from the financial realities.

"Get your kids involved in saving for a college education," said Mandy Ginsberg, chief executive officer of Tutor.com, an online-only company owned by IAC/Interactive Corp. (symbol: IACI).

"Don't shield them," she said. "They're going to be paying loans back for 25 years, so they need to know it matters."

Ginsberg knows of what she speaks: She graduated from the University of California at Berkeley and has an MBA from the Wharton School at the University of Pennsylvania, and she is still paying off her business school loans.

"Paying for college is not a four-year commitment. It's a 24-year commitment," Ginsberg said. "There are so many scholarships out there that never get used. It is just a matter of finding them."

There are online tools to help with scholarship searches. College Board's Big Future website includes an awesome scholarship search (bigfuture.collegeboard.org/scholarship-search).

The website Finaid has good basic scholarship data too (www.finaid.org).

Now, the nitty gritty, from Ginsberg:

If you feel paralyzed, start by saving just a little. Pick three areas in which you can cut back roughly $100 a month. For example, you might decide to only buy lunch twice a week. Saving, say, $10 three times weekly equals $120 per month.

Just like that, you've saved $1,440 in one year.

Skipping on one weekend dinner out and a movie each month could save you an additional $100 per month, or $1,200 a year.

You've probably made strides toward paying your child's first semester of room and board.

Engage your child at any age. Having a bank account or a 529 savings plan devoted to college helps keep it on his or her radar.

"Many families I know follow the one-third rule for allowances: one-third for short-term purchases; one-third for charity; and one third for savings," Ginsberg explained. You can earmark the savings as money toward college.

"It's still technically your [the parents'] money, but it's working a lot harder in a college account," Ginsberg said. Encourage your child to do the same with gifts of money or salaries from an after-school job.

Never put money aside for college at the expense of your own retirement," Ginsberg insisted. Any financial adviser will tell you that you can get loans and aid for college - but not for retirement. Fund your own accounts first, and then put as much as you can aside for your child.