While my wife was pregnant with our first child, we decided that we wanted to pay for our son’s college education when the time came. When it comes to money, I always like to have a plan, so I began researching different types of college savings plans that we could setup for our son when he was born. I wanted to avoid having to come up with tuition money all at once when he started college. After analyzing several options, we both settled on setting up a 529 College Savings Plan for various reasons. There were several options that we liked from the 529 plans, which is why we chose to set one up.
Once we chose the type of savings plan, we made a decision that we would contribute a set amount of money every month as soon as he was born. We also decided up front that the majority of money he would get from gifts would also go into the plan. For example, when he was baptized he got a few hundred dollars in gifts that we put directly into the plan. The question at that point was how much did we need to contribute each month to meet our goals? I ran several online calculators that helped determine the projected average cost of a 4-year college degree at the time my son would be starting college. Based on the calculators, I was able to arrive at $250.00 per month to have enough money to pay for 75% tuition for a 4-year degree. So I immediately setup an automatic withdrawal every month from our savings account directly into his 529 plan.
We now have two boys, so when our second child was born we setup a 2nd 529 plan. For the 2nd plan, we chose not to use the calculations this time and opted for investing the $250 per month amount again. In total, we invest $500 every month from our family budget into our boys future. There are many times that I balance our monthly budget and think of all the other places we could use the $500 every month. That is a substantial amount of money compared to what we are living off of right now. My wife and I have debated many times with friends and family who have young children about paying for their college. Many of these parents disagree with our philosophy about paying this bill, stating their children should be responsible for paying for secondary education when the time comes. I have no problem with other parents who have taken this view. I think college is a time and place to learn about personal money management. What better place to learn real life examples of paying for room and board and budgeting your finances. My wife and I actually disagree a little on this point. I believe in paying for most of a child’s education where she believes in paying for all of the education. I think it is very important for a young adult to learn how to balance a part-time job while going to school to help pay some of the bills. My wife on the other hand would prefer our boys not worrying about working so they can focus strictly on their studies. This is a debate we will probably have for a long time.
My wife and I have now opened up discussions with each other about having a possible 3rd and final child. Of course, the main con against this decision is finances. We are living off of one income right now and how could we possibly find room in the budget for another kid? Unfortunately, money should not be part of this conversation and the decision should be based on other factors. However, in the end, money is going to be the deciding factor. A third child means that we would need to come up with another $250 per month to put into an additional 529 plan. I have found some ways to get at this number, but that requires additional sacrifices and does not allow for a lot of wiggle room for financial emergencies. We could always reduce the amount we put into each of the plans, which would help our bottom line every month. My wife is also planning on going back to work eventually to help with the finances, but that wouldn’t be until all of our children are in school.
As I noted above, we have many friends and family who do not save money for their kids college education. Instead they have not planned anything at all, have decided to pay for it when the time comes, or have made the decision that their child will be responsible for these costs when that time comes.
Do you have children and set aside money for their college savings? Are my wife and I in the minority of parents?
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We have a 529 plan for both of our sons. Unfortunately, we are unable to put a set amount into it right now. When I was working from home, I would put a percentage of what I made each month. But, we’ll get serious about it again when I go back to work. One other way that we save for college is through Upromise.com (if you haven’t checked it out). I usually save about $20 a month towards college through Upromise (it’s free).
I would love to be able to pay for both my son’s college education. My parents paid for mine (well, basically room & board, since I had a full tuition scholarship), but they taught me money management skills at home long before college, so I did not take advantage of the fact that they were paying for it. I was grateful for the fact that I didn’t have huge student loans when I graduated. I would hate for my boys to start out their lives in massive debt due to college.
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We have college funds for both of our boys. Our boys are 14 and 17. The 17 is a college freshman on full academic scholarship. He plans to use his college money for graduate school. We told them we plan to pay for a 4 year degree but after that they are have to finance their own education. If they don’t use the college fund for undergrad they can use it for graduate school.
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We don’t currently plan on saving for college for our boys, although we do talk about it occasionally. My mom paid for an expensive private high school and had no money for college. Having to pay(loans) for college was one of the best things that happened to me as far as maturity.
I am not sure I like the sound of that the decisions of whether to bring a third child in this world is based on money. Stuff, college included, isn’t what makes a happy, strong, moral, courageous, beautiful child. Just my thoughts.
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