How do you save for kids college fund?

[onescgirl]

Thought I could get some knowledge/tips on here.

 

[puffkin]

We don't

I know we should but we don't. He has a small fund that we dump birthday/christmas money in and a little extra here or there, but that is about it. I am hoping that money will be enough for books and supplies and that type of stuff when he gets to college at least.

We just got done paying $10K+ a year in daycare costs. Now our daycare costs are down to about $3K a year for before and after. We just refinanced and our using that extra money to pay our house off in about 10-12 years. We also put about 6% of our salary in our 401K plans (enough to max out the company matches). Our medical bills after insurance run about $500-$600 month on top of everything else (DH is a Type 1 diabetic). We also have long commutes to work so our transportation costs are high.

We do live fairly frugally but we do make splurges here or there (mainly on our Disney trips about $4K/yr). But we work so hard that we really value our time away as a family. Besides that we don't really spend a lot of money because there just isn't much left.

Our focus is to stay debt free as possible (right now we have my student loan, mortgage and 1 car payment) and by the time DS is college age all that will be gone. So we will just do the best we can to pay for him then....kind of like paying daycare costs for a 18 year old. I know it isn't the best plan ever, but we feel it is more important to continue saving for retirement and make sure we are fiscally sound ourselves first.

 

[disykat]

Along the same lines, we paid off our mortgage early. We had always put extra on, with the goal of paying off the mortgage shortly before our oldest started school.

We paid off the mortgage in April and now all that dedicated money each month is pretty much going straight to the university our oldest is starting at this week. That amount is only slightly less than the cost of school he's going to and actually more than we owe since he got a few scholarships.

We also have two years of prepaid college for both kids in our state's plan (supposedly one of the better ones so you should look at it if you go that way - WA GET) for the years that our kids will overlap. We've been buying those whenever we had any extra cash - often at the expense of other things we wanted like nicer vacations or furniture etc.

Another big point has been making it clear from early on to our kids that they will be responsible for their own spending money. We pay tuition, up to the cost of room and board at the school for living, and half of their books. The rest is up to them. Hopefully our kids won't have loans, but I think it's important to make it clear what they'll be responsible for taking out in their own name if they do. We also have laid out some of the parameters of the "scholarhip" they are getting from us.

I think many kids go into school just assuming their parents will cover everything so I think it's important to lay out expectations early.

 

[Chee Chick]

I have accounts for both my children with the Texas Tuition Promise Fund. It is a 529 prepaid tuition fund. It basically allows you to purchase credits for college at today's rates. These credits cover tuition and fees. I think 100 credits will cover one year of college. The price of credits changes every year based on inflation of college cost for that year. It is a much better deal than the typical 529. I almost have one whole year of college paid for DS. You should check to see if your state has something similar. I have it set up to automatically take a certain amount of money out of my checking account every month. So, I think of it as a monthly bill. I have really high daycare bills as PP have mentioned. My plan is to up my monthly contributions once DD starts elementary school.

I also take any money that the kids receive from grandparents for birthdays or Christmas gifts and put it in the accounts. They surely don't need any more toys.

 

[DawnM]

Well, we are much the same as those above. We don't have a specific college fund, but we have some IRAs that aren't specifically designated that could be used. We also plan to have most of the house paid off and I could go back to work if necessary.

However, we have told our kids that we will pay for the local 4 year college while they live at home for free. Anything above that they will need to pay the difference. We can actually cash-flow that amount, so it shouldn't be too difficult for us.

Dawn

 

[PatsMom]

I had a 529 account for my daughter at Fidelity. I saved $50 a month for a long time, and increased it when I got raises. Any birthday gifts or Christmas gifts also went into that account until she got old enough to understand money!

I ended up with enough money to pay cash for two years at one of the most expensive public colleges in the country (University of New Hampshire). She chose to live in the dorm knowing that those expenses would mean that she would be borrowing for her last two years and for her year of grad school. I am paying the interest on the private loans while she is in school and also paying down some of the principal.

I wish I had saved more. I knew I was behind the curve on saving but my husband is quite a bit older than I am and he wanted to retire at a reasonable age. You can borrow money for school, you can't borrow money for retirement. So our retirement savings always took precedence.

 

[bettymae1121]

I've been researching it since our first child is due in Feb. I'm not sure if I want to do 529, pre-paid tuition, or just squirrel it away in an ING savings account. With 529's and Prue-paid tuition, there are penalties if the child ends up not going to college. I like to have more flexibility with the money, if my darling daughter chooses another path in life, I want to be able to then use that money for her in other ways, or use to pad our retirement accounts (we're on track with retirement, but a little more never hurt, right?).

 

[lovindisney4ever]

I thought that I had college for my daughter all figured out when she was about 2 (now 13). Her and I took her piggy bank into the local bank and started a youth savings account. We always put 1/2 of her birthday and Christmas money in there and then whenever she would reach $500 we would buy a CD. She currently has two of these. Then when we moved to Florida when she was 5, I started the Florida Prepaid College Plan for her. It set tuition costs for that year and I made monthly payments of about $82.00 a month. It felt so good to have everything under control and knowing that she was going to be set for college.......THEN LIFE HAPPENED!!!! In 2010 my husband and I split and he left me high and dry with over $6,000 a month in bills to pay and with my salary alone I could not do it. After cashing out every possible thing that I could and I still couldn't feed my daughter and keep a roof over our head and the day I found out they were going to reposses my truck, I had no choice but to cash in most of her college fund. She still has her CDs but we had to empty the prepaid fund and her small savings account. I felt like the absolute worst mother in the entire world but I knew if I didn't I couldn't take care of her at that present time and that was way more important. I didn't have anywhere else to turn.

But now, I am getting my life back on track and have started over fresh in Michigan near my family. My salary is very low here but so are my bills and now I can plan for our future a little bit more each month. I started replenishing her savings account again in July and it automatically goes in from my paycheck. It is not much but it is a start. I hope to also replace her prepaid fund by next year.

 

[crisi]

We did a 529. The amount we put in varies depending on the other demands on our income. Now its fully funded for a state school and I don't want to pay penalties if my kids don't use it, so the money set aside is going into our brokerage account to pay if the kids want to go private.

We started this when we stopped paying for daycare - so we didn't get a start on it until they were five and six. Like others, we paid off the house as well to enable savings. When we had daycare and a mortgage, college savings wasn't a priority.

I have two, and I'm pretty sure that one of them will end up at an inexpensive state school - because that is pretty much where he looks like he will be comfortable and excel. The other is in sixth grade and currently wants Georgetown She has the brains and that sort of school would be a good fit for her. So I'm not too worried about paying penalties in the 529.

 

[budafam]

We have savings accounts for the kids that we put all their birthday money into & extra gifts here and there. I add a certain amount every paycheck to each of their accounts. We don't put much faith into college after seeing so many of my family members go through years and years of it to only end up at a mediocre job that had nothing to do with their majors anyways. My husband never went to college a day in his life (heck, barely graduated highschool) and has an excellent job just by working his way up in the company. Hopefully there will be scholarships as well if my children do decide to take that route in life.

 

[mommy2allyandaveri]

We have put $100 per month, per child in an ING account since I found out I was pregnant with each of them. Then about once a year I send about $1000 of their account to our investment person and he takes it from there. I'm not really a fan of 529's, this works for us.

We also put the majority of $ gifts into their savings.

DH and I were both raised with the mentality that parents paid for kids' college so that's what we would like to do. If we can't do all, at least a good chuck I think.

By the time they graduate they should each have about $25k

 

[AZMermaid]

My FIL gave us $50,000 for my son when he was born that I believe is in a 529. I remember figuring out at the time it should roughly double by the time he is ready for college. Our thought was that should cover tuition, room and board at a state school in 18 years! So far, we have not contributed any more to it. I am not sure we will, I want him to have to earn spending money or borrow if he chooses to go out of state, to put some responsibility on him for his choices. I am assuming my FIL will give the same to our second child, due in Feb.

 

[cari12]

I've been researching it since our first child is due in Feb. I'm not sure if I want to do 529, pre-paid tuition, or just squirrel it away in an ING savings account. With 529's and Prue-paid tuition, there are penalties if the child ends up not going to college. I like to have more flexibility with the money, if my darling daughter chooses another path in life, I want to be able to then use that money for her in other ways, or use to pad our retirement accounts (we're on track with retirement, but a little more never hurt, right?).

I feel the same as you, if you put the money in a dedicated education account, you lose a lot of the interest if the child does not go to an approved school. We are in Canada so the names of things may be different but you probably have similar products in the US.We started saving in a high interest savings account when DD was born but when we got a tax slip that we had to pay tax on the interest earned, we switched the money to a TFSA (Tax Free Savings Account) which is like a retirement or education account in that you can invest in mutual funds, bonds, GIC's (whatever you choose). And you do not have to pay tax on the earnings. It will be taxed when the money is withdrawn.

 

[Leshaface]

We don't

I know we should but we don't. He has a small fund that we dump birthday/christmas money in and a little extra here or there, but that is about it. I am hoping that money will be enough for books and supplies and that type of stuff when he gets to college at least.

We just got done paying $10K+ a year in daycare costs. Now our daycare costs are down to about $3K a year for before and after. We just refinanced and our using that extra money to pay our house off in about 10-12 years. We also put about 6% of our salary in our 401K plans (enough to max out the company matches). Our medical bills after insurance run about $500-$600 month on top of everything else (DH is a Type 1 diabetic). We also have long commutes to work so our transportation costs are high.

We do live fairly frugally but we do make splurges here or there (mainly on our Disney trips about $4K/yr). But we work so hard that we really value our time away as a family. Besides that we don't really spend a lot of money because there just isn't much left.

Our focus is to stay debt free as possible (right now we have my student loan, mortgage and 1 car payment) and by the time DS is college age all that will be gone. So we will just do the best we can to pay for him then....kind of like paying daycare costs for a 18 year old. I know it isn't the best plan ever, but we feel it is more important to continue saving for retirement and make sure we are fiscally sound ourselves first.

My hubby and I don't have kids yet but we don't plan on saving for our kids college fund either.

We were the ones that decided to make the big step and decide to go to college, therefore, we should be the ones to pay for college. I would have NEVER expected my parents to put their money towards my education.

However, what we did decide on was that we would help pay for their books and some of their living expenses while going to college so they wouldn't focus too much on working while going to school.

Right now we just have DH's student loan (I payed mine off the year after I graduated college) and we still have a couple years till his is finally paid off. We pay extra on our mortgage each month, don't have any car payments...yet (will need a new vehicle sometime soon) so right now we're doing pretty good. Retirement funds are looking good, will be increasing my simple ira after I receive my raise soon.

 

[MrsPete]

Thought I could get some knowledge/tips on here.

The most important thing isn't HOW you save; it's THAT you save. Some methods will bring you a better return, more security, whatever -- but doing it is #1 on the list. You'll always find something that you'd rather do with your money (or something that you think you have to do with your money), and you'll always be able to rationalize why you can't do it for another year or two (you'll find another reason in another year or two), but starting right now is the best option. If you can't save something each month, you're living beyond your means; and the only answer is to downsize your lifestyle a bit -- I know, easier said than done.

We have the majority of our savings invested here and there. We've earmarked a portion of it as "college savings", but we keep it in our names. Our 17-year old is very mature and reasonable when it comes to money, but she doesn't need the temptation of having all that money available to her. I could see her rationalizing buying a new car or renting an apartment (instead of a less expensive dorm) and telling herself that she'll borrow for her tuition -- it's easy to pay back student loans, after all, isn't it? Lots of things are very easy 'til you start doing them yourself.

Another reason to keep the money in your name: If you're likely to get some financial aid, the "powers that be" will take a smaller percentage from parents' accounts than from the child's account.

In addition to what we've saved, we have another plan: My husband and I have been in our professional jobs for 23 years and 20 years, and we've been saving aggressively for retirement during that time -- our 401Ks have taken a hit in recent years, but they are still well-funded. Our back-up plan is to STOP contributing to them for the years that our children are in college. This would give us a huge "raise", yet our 401Ks would remain untouched and (hopefully) would continue to gain. This is a possibility for us only because we are well ahead of the curve on retirement savings.

Another big point has been making it clear from early on to our kids that they will be responsible for their own spending money. We pay tuition, up to the cost of room and board at the school for living, and half of their books. The rest is up to them. Hopefully our kids won't have loans, but I think it's important to make it clear what they'll be responsible for taking out in their own name if they do. We also have laid out some of the parameters of the "scholarhip" they are getting from us.

Yeah, I agree that it's wise to let your kids know exactly what you can /will pay. And help them understand what they need to do to manage their part of the financial costs of college -- don't assume that an 18-year old knows what it means to take on a loan or how much college will cost in addition to just the tuition. Especially for their first year, they need guidance.

We have savings accounts for the kids that we put all their birthday money into & extra gifts here and there. I add a certain amount every paycheck to each of their accounts. We don't put much faith into college after seeing so many of my family members go through years and years of it to only end up at a mediocre job that had nothing to do with their majors anyways. My husband never went to college a day in his life (heck, barely graduated highschool) and has an excellent job just by working his way up in the company. Hopefully there will be scholarships as well if my children do decide to take that route in life.

I think you're dead-wrong not to put more faith in the value of a college degree. My husband and I have each had back hundred-fold every penny we spent on our educations. The key is in choosing a major that'll actually lead to a job and a paycheck. Not all degrees are equal.

I know plenty of people my age who are living comfortable middle-class lives without college, but the world is changing. Our children won't be able to pull off that same feat: The world is a harder, less-forgiving place these days, and they need some form of job training or college after high school to have a shot at middle-class.

Scholarships are far from a sure thing. Hope for them, push the kids to search and apply for them, but never assume they'll come through. If they do, you win -- you get to use the money for something else; but it's better to have the money saved and not need it than to need it and not have it.

My hubby and I don't have kids yet but we don't plan on saving for our kids college fund either.

We were the ones that decided to make the big step and decide to go to college, therefore, we should be the ones to pay for college. I would have NEVER expected my parents to put their money towards my education.

However, what we did decide on was that we would help pay for their books and some of their living expenses while going to college so they wouldn't focus too much on working while going to school.

Right now we just have DH's student loan (I payed mine off the year after I graduated college) and we still have a couple years till his is finally paid off. We pay extra on our mortgage each month, don't have any car payments...yet (will need a new vehicle sometime soon) so right now we're doing pretty good. Retirement funds are looking good, will be increasing my simple ira after I receive my raise soon.

College is significantly more expensive than it was back when I paid my own way through. Not saving something for your kids' college education means they'll almost certainly have loans, and that just makes their lives more difficult as they start out on their own. I'd rather live in a smaller house and drive an older car (or make similar choices) than to tell my kids, "Good luck, you're on your own for college!"

This may seem different to you when you actually have children of your own. Saying hypothetically, "Work hard! You can do it yourself!" is one thing. Once you know your child, understand his strengths and weaknesses, want to help him succeed -- it's harder to take a hard "Pull up those boot straps" approach when you're thinking of your own, real, flesh-and-blood child whom you've loved for years.

 

[disneysteve]

We invest monthly (and automatically) in a 529 plan. Our state doesn't give a tax deduction so we use an out of state plan that has a good track record and low expenses (it is run by Vanguard). I think we started the account when DD was 6 and we've built up over 40K in there to date. She's about to turn 16 next week.

The best site for exploring your options is savingforcollege.com

 

[jwfla422]

We do the FL prepaid fund, even thought it is for tuition only it will definitely help to give her an opportunity to go to college. I went to college on a lot of grants and financial aid back in the day. I wouldn't rely on that for our kid's futures as it may not exist.

I wouldn't expect dd to pay her entire way through or to worry about paying off loans for the rest of her life. Why not help her if I can? Why would I make her pay the tuition costs of 2018 rather than 2007 if we can make that happen? I work part time and part of my salary goes into the fund each month. Check out your state's available programs.

I had a part time job during college and worked full time over the summer to pay for some of my room and board, I will expect dd to do the same.

 

[Leshaface]

College is significantly more expensive than it was back when I paid my own way through. Not saving something for your kids' college education means they'll almost certainly have loans, and that just makes their lives more difficult as they start out on their own. I'd rather live in a smaller house and drive an older car (or make similar choices) than to tell my kids, "Good luck, you're on your own for college!"

This may seem different to you when you actually have children of your own. Saying hypothetically, "Work hard! You can do it yourself!" is one thing. Once you know your child, understand his strengths and weaknesses, want to help him succeed -- it's harder to take a hard "Pull up those boot straps" approach when you're thinking of your own, real, flesh-and-blood child whom you've loved for years.

It's super expensive now! Well, luckily FA paid for the majority of my schooling and I only needed to pull out a loan of about $6000 which I paid off very quickly. DH on the other hand...

I think had my parents paid for my entire education, I wouldn't think the way I do today. I don't think I would have understood how much 'real life' costs, if that makes sense. I certainly wouldn't understand the value of a buck. They didn't pay for their education either (even though my dad's side of the family is very wealthy and could have easily paid off 4 years of education in one check, they chose not to.)

Before going to college, I literally thought money grew out of my backyard. But when I got to college and started paying on my own, I was like, "Woah. I really can't play around right now." I started making wiser decisions regarding money, and became even MORE thankful, when my parents would help out buying some books.

Would it have been easier had my parents and my husbands parents paid for all of our education? ABSOLUTELY! Man we'd have $800 to play with each month! However, i'm not sure we would have the knowledge of money/saving/paying bills like we do now.

We DEFINITELY will help our kids in anyway possible during college and would never let them fall behind (I just KNOW i'm going to be a sucker and slip a few extra hundred or two into their pockets every now and then to make doubly sure they're okay ).

 

[goodeats]

First of all, unless they get a stellar scholarship, I expect DD's to go to one of the wonderful in-state universities we have in CA. Not that they are cheap, but certainly more reasonable than the private schools. I also expect that we will float some/a lot of their living expenses at the time. The mortgage (if it's not paid off by then) will be a smaller percentage of our pay by then - I hope!

Once we got older DD's SSN we opened a Vangaurd 529 with $3K and have put $100 a month since then. I'd like to do more, but I'm a SAHM and retirement is a priority. We also put any monetary gift she receives over $50 into it. She's only 2 and it's already almost $9K! Although I haven't checked it after the recent drop in the market. We plan to do the same with our next DD, due in December. My in-laws also opened a 529 with a significant amount in DD's first year. I'm not necessarily counting on that money, but it's nice to know it's there also.

 

[nikkistevej]

We have a 529 college plan and put money into it every month automatically- because I would forget otherwise. LOL We also just signed my DD up for the Gerber college plan. We figured we will help as much as we can, but I don't want to pay for the whole thing- she will have to be responsible for some of it. DD just turned 9.