My two kiddos are still pretty young, so most days college feels like it's a million years away. But despite my constant denial that they'll continue to grow, I try not to get complacent when it comes to planning for their futures. There's no way to know exactly what paths each of them will take in life, but I do know that I'll do everything in my power to make sure they end up in college. And I would like to make their higher education experience as financially stress-free as possible. Now that doesn't mean my kids can expect a free ride (I put myself through college and am a firm believer that everyone should contribute to their own college experience for a dose of character building), but I want their main focus to be on school — not how they're going to pay for their books.
Taking out student loans that follow them around for decades isn't something I want for my kids. But with 4-year public university tuitions topping in at more than $100,000 per child, avoiding that isn't an easy task. There are strategic long-term plans you can follow to help make this expense less painful for yourself and your child, but they require discipline, patience, and above all, a willing participant in your college-bound kid. Warren Buffet famously said about his children, "I want them to get enough that they feel they can do anything, but not so much that they could do nothing." I don't think I could have said it better myself!
- Pay Yourself First — You have to save for your own retirement before you can save for anything else. I recognise the significant difference between "needing" to save for my old age and "wanting" to pay for my children's college tuition, and having financial freedom after retirement is not only a gift I will give to myself, but to my children as well.
- Invest in Academics — Go all-in with your kiddos' education from the beginning. Teaching them to excel academically and helping them along the way benefits both of you immensely. I am counting on my kids' ability to obtain scholarships to help offset some of the college expenses.
- 529 Savings Accounts — I have automatic deductions from my checking account into the kids' 529 accounts. Along with having some tax benefits attached (depending on which state you live in), it's comforting to know there is a steady stream of funds being saved for your child's future every month.
- Your Kids' Contributions — Yes, even though my boys are still over a decade away from college, I'm including their future wages and savings into my budget. This means that every week when my eldest son gets his allowance, $2 of it goes toward his college fund. So what if every year he contributes less than $100? It's still a significant amount for a 9-year-old, and the experience of going into a bank and depositing money into his own account fosters a sense of how hard it is to save. And this formula assumes (actually, demands) that my children will work at least part-time when in college to help pay for miscellaneous expenses like pocket money.
- Pay Off Your Mortgage — I'm working hard to try to pay off my mortgage before my first one enters college. That way, I'll have a chunk of change to direct toward college expenses, if need be. And if the maths doesn't add up by the time my children start college, I have no qualms with having them live at home and start their higher education at a community college first.