A reader asked....
How are you planning financially for college for your kids?
Oooh, that's a good one. This one involves a practical response as well as the unveiling of some beliefs I hold. I'll start with practical because that's easier.
First, I'm a firm believer in kids learning the value of setting a goal and figuring out how to accomplish it. As much as I love my children, I know from my own experience that I value things a whole lot more when they haven't been handed to me but when I've had to put my own drive, passion and efforts into getting them. For example, the car I was given at the age of 16 and killed out of carelessness because I had no invested interest in it. Compare that experience with the one where I had to take out a loan and hold down a job to make payments. That car, I treated like a baby.
Or with my 14 year old son who wanted a dog and decided to get a job, earn the money and do the research. He doesn't even complain about scooping poop. The dog we handed to him for Christmas when he was 10? Nobody claimed ownership or responsibility for that dog. She lasted 18 agonizing months before we found a new home for her and finally got the yard cleaned of all that poop.
So the thought of just handing my kids $50k or more for their college education? Do I really think they are going to respect that education as much as the one they work hard for and are determined to get? I'd be robbing them of a whole passel of life lessons. So no, we don't feel that we need to provide for their college education.
We do have a savings account for each kid though. We haven't decided what we'll use it for or when they'll get it. I think for each kid it will be different and we'll know when the right circumstances are presenting themselves for us to unveil it.
And this is how it works. Every time the kids earn some money or get a monetary gift they are given the choice to save part or all of it. Whatever dollar amount they choose to save, we match. So if they choose to save $20, we match the $2o for a total of $40 going into their accounts. Then we explain how Dad invests it for them and in 10 years their $40 turns into $400 dollars. Pretty good incentive for saving. They are a part of the process of tracking the growth of their investment as well, so they can see what is happening with their money and learn the concept of investments.
Now, for the college education thing. I'm a questioner. I don't do something just because everyone else does. I don't believe that public education is the best place for my kids just because that's the normal thing to do. I don't believe that college is necessary just because everyone says it is. And I'm not placing that expectation on my kids either. (Notice I am applying this to my kids, not yours. This is what we believe in our family and I'm not saying that your beliefs are wrong if they differ from mine.) What I do believe is finding my children's passions and learning to turn that into something that they can use to support themselves. I want to fan that flame and help it to grow into something they will want to do the rest of their lives. I don't want them to work a monotonous job that they hate for all their lives just because they need to pay the bills. Life is too short to be trapped like that. And money isn't near as important as a full life and a healthy family.
My job is to help them dip their toe into every area of interest, see if it's something they have a talent and passion for, and then feed and nurture it.
Now if my children's passions lead them to a career where a college education is a must than I'm fully supportive of that goal. But if a trade school, apprenticeship, or just plain hard work and motivation is what's needed, then I'll support that too.
And that's our financial plan for our kids education.