The Money Mustache Community
Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: texastumbleweed on December 30, 2016, 01:06:31 PM
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Subject says it all: how much money do you put aside for each child each month? Mine are still little, but I know there is no time like the present.
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Subject says it all: how much money do you put aside for each child each month? Mine are still little, but I know there is no time like the present.
In WI, we can reduce our income by $3000 per child. Since that is the only tax advantage, that is what we put in. We do not "save" monthly, we just write 1 check per year to our state program (EdVest). We srtarted when they were 0 years old.
It definitely adds up. The 17 year old has $94,000, and the 19 year old has $65,000. I just moved the 17 year old to guaranteed, since she will use it all withing the next 5 years. 10 year old in 100% stocks.
Congrats on getting started.
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We have one 6 month old. We're planning on $5k/yr. With compound interest around 4%, that should come to $120k to cover room/board for 4 years at a reasonable college. Grad school we will probably cover separately when the time comes.
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We live in a HCOL area. Our plan is to be FI in about 10 years. By the time our kids are in college (about 8 years later), we'll just have a few years left on our mortgage. Once the mortgage is done, we can use the money that used to go to our mortgage to either pay for college or to pay off newly acquired student loans. I like the flexibility this gives us in how to use the money, because we have no idea what the educational landscape will be like by then. Even if it's just the same as it is now, our kiddo might choose some kind of other path.
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One 1yr old toddler and will hopefully have 2 more kiddos. We plan on dedicating 5k per year per child for 17yrs each.
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There is no tuition cost in the Nordic countries, and I will be surprised if that changes within the next 10 years. We do save $100/month for each child to cover some living costs and potential increased costs of studying a year or two abroad. The state scholarship is currently $5500/year to cover living costs and books if they move out from home, and an additional $6000/year to cover part of the tuition costs if they study abroad. Student loans are interest free until they finish school, so we might encourage them to take out the loans, and then help them pay them back before the interest starts running. But we also expect them to work part time, if they are at all able to. If not, they'll have to apply for more scholarships.
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We have a 1 year old with plans for at least one more child, maybe even a third. We don't get any state tax incentives for 529s, so we just put $100/month into Vanguard's 529 plan, plus whatever family members choose to contribute. Once we have a 2nd kid, it'll probably go up to $200/month.
We could put in much more but I don't plan on the 529 account covering all of their college costs for several reasons. While both me and my husband got 4 year degrees, but maybe our kid wants to go to a trade school or into the military. In two decades the cost and structure of college could be very very different. And I'm on board with sharing the cost of a 4 year college with my children, rather than covering it 100%. I paid for all of my college education, and my husband paid for none of his, so this is something we're compromising on.
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We have 3 kids under 5 and we put $450/mo into a 529, plus whatever they get for birthdays from family. That probably won't be enough to cover college expenses for all of them, but we also have some rental property which we hope to be making a profit from by the time they go to college and we plan on using that profit to offset their college costs.
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is that $450 a month for each kid or total? $450 seems like a lot to me per kid but maybe it isn't?
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We are maxing out the state deduction, so $385/month. He will have about $50k of total contributions when we pull the trigger in 8 years, and another 6 years of growth, so hopefully $80-100k to cover college. Might cover a year at the current rate of tuition increases.
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We're doing $700/month/kid right now, but I plan to reduce our contributions once a FV calculation at 8%ish growth shows we'll hit $100k/kid when they're college age. I'll probably throttle things back to $200/kid/month at that point and invest the difference in other areas.
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$150 per month, starting the month she was born. I'm not trying to pay for everything with this, I just want to help her some.
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is that $450 a month for each kid or total? $450 seems like a lot to me per kid but maybe it isn't?
It is $450 total, we just have one 529 that will get split between them to fund college. It would be nice to save more using another vehicle, maybe a UTMA, but right now that's all we can afford.
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We have three kids 6, 4 and 2 and we are putting in ZERO. My priority is to ensure that our retirement is covered and we will not be dependent on our children as we age. We also prioritized having one SAHP and have decided to homeschool them. The plan is to expose them to as much as we can at an early age so they have a good idea what they want to do in terms of career/job and how to be self sufficient once they turn 18 or earlier.
If it seems like they will be going the college route then we will structure our income to minimize it so that we minimize the expected family contribution (EFC), if we are not FIRE yet. We will also guide them to earn as many college credits before they even go via AP classes or CLEP. Have them apply for as many scholarships and work study as possible and if it is still not fully covered then we might cash flow some of it with full-time or part-time work between the wife and I.
Just like retirement we do not plan to follow the standard plan of saving and paying full price for their college education if they want to go that route.
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is that $450 a month for each kid or total? $450 seems like a lot to me per kid but maybe it isn't?
The thing I try to keep in mind when talking about college funds is that every person’s situation is unique, so don’t get freaked out if some of the investment amounts you see here seem really big to you (or really small). The ideal amount to contribute for your kid is entirely dependent on your own income level, financial goals, retirement savings rate, and personal values regarding how much help you think is necessary/practical/appropriate for college. For us, a 5k/yr investment is not much due to our high income and the fact that we save >7x that for our own retirement/financial goals, but it wasn’t always this way. A few years ago we were making far less and were saddled with massive student debt, so we knew that we wouldn't even consider setting up college funds until the loans were gone and we had achieved the ability to max our retirement accounts first. Similarly, we may find that in a few years my husband wants to cut back or change gears in his stressful career, and we might re-evaluate and downshift our college contributions accordingly.
We came to our current investment amount by weighing our desire to offer substantial help (not necessarily a full ride) with our own personal goals, and decided that 5k/yr/child would be very generous but would not negatively impact or derail the larger finances of our family. If we had to choose between maxing our retirement accounts and putting this amount towards college, we would have chosen to put less towards college. My personal advice is to pick an amount you can comfortably afford month after month (or year after year), feel good about it, and just let the chips fall where they may. Following this “set it and forget it” strategy regarding the amount is far less stressful to me than trying to anticipate what college expenses will be 17yrs from now and back calculating how much I need to save to pay for X percent of that cost. If it is enough to cover everything at a reasonable university, awesome! If not, there are loans and scholarships. Easy peasy.
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We put $25/week per child in a standard savings account for each of our two children, 8 and 4 years old. Our oldest has another parent who may or may not be contributing, as well. Our intent is to help them when the time comes, but paying the whole thing is not something we're striving for. We both earn less than 40k and are not yet maxing retirement accounts. We have a branch of our largest state university within walking distance of our home, and they are welcome to live at home as long as they are in school. We also own a couple of rentals, so the income from those will be used toward education as well, if need be. We will also be encouraging them to explore 2 year degrees, trades, etc. depending on their interests.
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We retired with 3 kids under 10 so future college expenses is a big deal. We are going a little non-traditional in our saving approach. We bought a rental house, mortgaged over 15 years, and the rent pays the majority of the PITI. We probably kick in an extra $50 a month or so to make up the difference.
At this point, the house will be paid off by the time the oldest starts college so we can either sell the house which should pay for state schooling for all three, or use the rental income to offset the costs of college, then keep the rental income for our own use in the future.
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We could put in much more but I don't plan on the 529 account covering all of their college costs for several reasons. While both me and my husband got 4 year degrees, but maybe our kid wants to go to a trade school or into the military. In two decades the cost and structure of college could be very very different. And I'm on board with sharing the cost of a 4 year college with my children, rather than covering it 100%. I paid for all of my college education, and my husband paid for none of his, so this is something we're compromising on.
FYI - the GA 529 can be used for vocational schools. Your other points are very valid.
I'm struggling with deciding how much to contribute but that's probably a discussion for another thread.
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None.
My grandfather is saving enough for about one year of school per kid.
Well cash flow the rest. Our retirement will be pretty close to funded when they start college, so we can divert that savings to college of we deem it appropriate.
We do put any cash gifts the kids get onto their 529's, and our 2% CC rewards go into those accounts as well. But that will cover like a semester of books.
State schools are not *that* expensive. It'll be no problem to cash flow it. We won't be finding expensive private school or grad school.
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None. I don't think the ROI is there anymore. My husband makes way more than I do with just an AS he got for free.
Basically, I will have her do dual enrollment/AP in high school and we'll pay for a vocational associates degree through a local community college.
If she wants to go to a four year, she needs to figure out how to pay for that herself or go back to Germany.
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3 kiddos, ages 8,5,3.
We have very small 529 accounts opened for the older two. Once I dove head first into the personal finance world I stopped those contributions.
Currently saving zero for college.
-I am now prioritizing my own retirement savings.
-My husband is a stay at home parent, he may start working again at some point. Maybe we'll up college savings then, maybe not. Maybe he'll work while they are in college and we'll funnel his paycheck to cover tuition bills? Lots of options.
-Neither me nor my husband needed college savings. I got scholarships, he (wisely) dropped out of college because it wasn't the right path for him.
-I see the rising college costs and how everyone is saddled with monumental student loan debt and I think that it is entirely possible that the whole system will go through some major upheaval before my kids are college age.
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Two wonderful kiddos aged 9 and 7. Since they were born we've been putting in $100/month each plus their Alaska Permanent Fund Dividend (which has ranged from $1,000 to $2,000/year). I'm contemplating upping that amount to $150/month so they both will have about $100k saved for college. Saving this amount won't cover all of their college expenses, but both kids are members of a Indian Tribe which historically has given out pretty good scholarships.
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Currently $200 a month into an RESP in Canada which adds 20% grant (about another $40 a month)
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We have one 6 month old. We're planning on $5k/yr. With compound interest around 4%, that should come to $120k to cover room/board for 4 years at a reasonable college. Grad school we will probably cover separately when the time comes.
I was just wondering, what was the average rate of return you saw over those 17 years using EdVest?
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Zero. I have one left for college and I can pass my GI Bill benefits to him to cover a 4 year degree. He's on his own after that.
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I have two kids and currently save $416 per kid per month in a 529. In addition, we save a similar amount per kid per month in a regular account. Our kids are older (one actually in college now and one a junior in high school). We saved a lesser amount when they were younger, although I wish we had saved more then and less now. We pay room, board and tuition at a state college/university.
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Enough to max out the matching on our Registered Education Savings Plan (we're in Ontario, Canada). About $210 a month (that's our contribution monthly, with extras periodically from relatives etc).
It takes most of his (tax-free) Child Care benefit to contribute this amount, and I think it's enough to give him a good start without paying for absolutely everything.
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I started a 529 when my kiddo was 3 months old. we're putting about $100 a month in after the initial $3k to start it, but the grandparents enos contributing for gifts. Even though we're in an income-tax free state, not sure that will always be the case. Plus my thought is if it's not needed (because he doesn't go to school) the 10% penalty is still worth it rather than coming up with it at the time.
I work at a university, so if he choses to he can go there for free (as long as I'm still there). But since you can transfer it to a family member, if he ends up not needing it I can transfer it to my wife and I, and we can take continuing ed courses on cruise ships or study abroad with the money.
My dad worked at a university, and the options were any state school in the system, plus they paid rent and some bills for 4 years. Anything I wanted outside that I had to pay for, and all graduate school was on me. I know what it's like starting a life with $150k debt over my head, but I have classmates that didn't get help with undergrad so they're at $300k+. I want to help my kid but certainly not pay for it all.
I don't honestly think college will be in 20 years what it is now. THere's no reason you can't get 2 years done online or at a local CC and then go somewhere else for the "college experience". I wouldn't be surprised if technology and money saving policies completely change education before my kiddo gets there.
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Stevie. Why are you doing 529 then. It will be 19 years before our kids reach college. And I agree the landscape will likely be flipped on its head. I think a change in everyone going could change too
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I'm speaking as an aunt, not a parent here, and I'd love your input.
At first, I thought of contributing to 529s for the nieces and nephews, but then I came up with what I think is a better idea.
In my town, you can get the first year at community college free. I think most of them will take that route. If they do, they're likely to transfer to a state college. They should get scholarships (I'm in education, so I'll be sending them essay contest information constantly), but they'll likely have more to pay, and it's unlikely their parents can foot most or all of the bill. So I was thinking... if I hear they're taking out loans, I could offer them a 0% loan from me instead using my fun investment account money (my little account that's doing pretty well right now but is fairly high risk; I keep it around since the bulk of my investing is boring). That's fun money I'm not including in my retirement plans anyway; if it disappears, we're good. If it does well, we get a nice vacation... or a niece/nephew gets a 0% loan. As far as payment schedules, I think it would be fair to have a "pay off X amount by the time your little sister/cousin needs a similar loan" type goal. I'm not planning to foot the entire bill for anyone, but a 0% loan of any amount could prove very useful.
Such a loan would also be a great opportunity for us to have a chat about finances, saving, investing, avoiding credit card debt, etc., which could hopefully help them make some decent financial choices early on.
What do you think?
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Three kids, 6, 8, and 10. We have some employer coverage for college, but figured out that that we need to save 43k a year for the next 15 years to fully cover Ivy League costs for everyone. Number arrived based on a big excel spreadsheet.
We are only putting a little bit in 529s, enough to cover projected costs at state school. So even though it sounds like a huge amount to put away, it's really more an enforced savings mechanism and we will be able to use the money for other things should we need/want to do so.
Also, my spouse has no desire to retire early, so we are also funding for a more conventional retirement age.
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We have about $60k for each kid now and are saving up to the state deduction each year. We have another 10 years before college will start.
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One kid, age 2.5. We opened up a 529 last year and put $7000 in it from money we'd saved before he was born and cash gifts we received. Since then we've been doing $100/month. Kid also has a brokerage account opened by DH's grandmother, which she put $10,000 into.
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I'm speaking as an aunt, not a parent here, and I'd love your input.
At first, I thought of contributing to 529s for the nieces and nephews, but then I came up with what I think is a better idea.
In my town, you can get the first year at community college free. I think most of them will take that route. If they do, they're likely to transfer to a state college. They should get scholarships (I'm in education, so I'll be sending them essay contest information constantly), but they'll likely have more to pay, and it's unlikely their parents can foot most or all of the bill. So I was thinking... if I hear they're taking out loans, I could offer them a 0% loan from me instead using my fun investment account money (my little account that's doing pretty well right now but is fairly high risk; I keep it around since the bulk of my investing is boring). That's fun money I'm not including in my retirement plans anyway; if it disappears, we're good. If it does well, we get a nice vacation... or a niece/nephew gets a 0% loan. As far as payment schedules, I think it would be fair to have a "pay off X amount by the time your little sister/cousin needs a similar loan" type goal. I'm not planning to foot the entire bill for anyone, but a 0% loan of any amount could prove very useful.
Such a loan would also be a great opportunity for us to have a chat about finances, saving, investing, avoiding credit card debt, etc., which could hopefully help them make some decent financial choices early on.
What do you think?
I think a loan to a friend or family member can lead to hurt feeling, unless you are comfortable with it never being paid back. When they are driving by in a new car someday, maybe even a decade or more from now, will you be ok with that while they have an outstanding loan with you? What about a nice trip, a new sweater, some fancy new shoes? If you can not say you would not at all be bothered,I would not offer a loan under any terms.
A gift is a very nice gesture. I think you could reasonably state that this gift, while not due to be paid back to YOU, should be paid back in the form of them paying it forward to help someone else, maybe even after you are long gone.
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Oh, yeah -- I learned not to expect loan repayments a long time ago, so I wouldn't hound. But if I didn't get paid back and the kid was buying a new car and such meanwhile, that would simply be the last such loan to that kid. Like I said, it wouldn't be an amount I couldn't live without.
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We have a newly 2yo, and have only a couple hundred dollars saved so far in a 529. My wife's Grandfather left a bit in a trust fund for him, but it's only around $5k.
My wife and I both think it's more important to pay off our debts first. Once we're debt free, we'll focus on our own retirement savings, but up contributions small amounts to his 529, depending what's comfortable. I'm fine with him making his own path, as long as his mother and I are stable and able to support in some way.
The key is, we have no idea what college will look like in 16 years. It may be free. It may be the same. Who knows? What we do know for sure is that we'll want to retire, and if we successfully save enough to retire while he's college age, we'll at least set a good example for personal financial responsibility.
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Specifically for college? none. With that being said, we plan on building a biggest enough 'stach that we'll be able to pay for $200K (future dollars) for each after we reach FI. I am hesitant to lock up money in a 529 in case they don't go to college or in case we 'over save' and end up paying close to full cost vs. getting a break on tuition since it seems most people don't pay full price. I would rather the flexibility and potential cost savings vs. the tax savings.
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Specifically for college? none. With that being said, we plan on building a biggest enough 'stach that we'll be able to pay for $200K (future dollars) for each after we reach FI. I am hesitant to lock up money in a 529 in case they don't go to college or in case we 'over save' and end up paying close to full cost vs. getting a break on tuition since it seems most people don't pay full price. I would rather the flexibility and potential cost savings vs. the tax savings.
There are rules that allow you to withdraw equivalent amounts of scholarship money. The 10% penalty is waived. It is considered income to the student for that year. The 529 is also transferable to others. That said, your situation might show you are doing everything right to maximize your finances.
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Specifically for college? none. With that being said, we plan on building a biggest enough 'stach that we'll be able to pay for $200K (future dollars) for each after we reach FI. I am hesitant to lock up money in a 529 in case they don't go to college or in case we 'over save' and end up paying close to full cost vs. getting a break on tuition since it seems most people don't pay full price. I would rather the flexibility and potential cost savings vs. the tax savings.
This is my plan as well.
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Specifically for college? none. With that being said, we plan on building a biggest enough 'stach that we'll be able to pay for $200K (future dollars) for each after we reach FI. I am hesitant to lock up money in a 529 in case they don't go to college or in case we 'over save' and end up paying close to full cost vs. getting a break on tuition since it seems most people don't pay full price. I would rather the flexibility and potential cost savings vs. the tax savings.
This is my plan as well.
i think i'm currently in the same boat. based on FIRE date it will be 11-12 years after FIRE before kid 1 hits college. which is almost 20 years from now. i think the landscape will change. i also think that the 4% rule is overly safe and our money will grow exponentially so we'll have extra to pay tuition with.
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One kid, 20 months old. Currently contributing $1000 annually (she has $3000 right now) to a savings account that we are in the process of converting into a UGMA. We have plans for one more, maybe two more kids. Each will get the same. Once our own student loans are paid off (we've gotta finish paying for our college before we can worry about paying for our kids) and we are fully funding retirement, then this amount will be upped.
Our goal is for our kids to NOT use this money for college. As others have said, I sincerely doubt that, in 17 years, the costs of higher education will be structured the same way they are today. Google "education bubble". We will also emphasize AP/IB, as well as trade and vocational schools. If our kids really want to go the four year route, they can get scholarships and jobs to pay for it, or they can move to Germany or a Nordic country. Not even joking. The benefit of life in the Foreign Service - it will just be another international school for them.
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Stevie. Why are you doing 529 then. It will be 19 years before our kids reach college. And I agree the landscape will likely be flipped on its head. I think a change in everyone going could change too
even if education won't be quite the same as it is now, my guess is that it will still be expensive. If my kid goes to trade school or gets scholarships, I'm covered. If not but another family member does go to a school like that, I can transfer to them.
If not, I can transfer to myself and take cooking classes in italy through an american university. since it's a school, travel and related expenses are educational expenses. so I can go back myself and travel for free ;) I don't know that I'll always work in higher education, and not sure I'd recommend my career path for my kid, so not banking on him coming here for free.
I don't know what's going to happen, but I know the best time to plant a tree is 20 years ago. I can stomach the 100/month now, and if it starts to look like I won't need it, I'll throttle back.
WE're not as militant as many on this board, but we did buy less house than we could afford, drive used cars, save a bunch each month, etc. I think not using the money for education and taking the 10% hit will be worth it for 2 decades of tax free growth. Not sure, but only one way to find out. Putting some in regularly should lead to growth, and if my parents want to chip in for presents, so be it.
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Stevie. Why are you doing 529 then. It will be 19 years before our kids reach college. And I agree the landscape will likely be flipped on its head. I think a change in everyone going could change too
even if education won't be quite the same as it is now, my guess is that it will still be expensive. If my kid goes to trade school or gets scholarships, I'm covered. If not but another family member does go to a school like that, I can transfer to them.
If not, I can transfer to myself and take cooking classes in italy through an american university. since it's a school, travel and related expenses are educational expenses. so I can go back myself and travel for free ;) I don't know that I'll always work in higher education, and not sure I'd recommend my career path for my kid, so not banking on him coming here for free.
I don't know what's going to happen, but I know the best time to plant a tree is 20 years ago. I can stomach the 100/month now, and if it starts to look like I won't need it, I'll throttle back.
WE're not as militant as many on this board, but we did buy less house than we could afford, drive used cars, save a bunch each month, etc. I think not using the money for education and taking the 10% hit will be worth it for 2 decades of tax free growth. Not sure, but only one way to find out. Putting some in regularly should lead to growth, and if my parents want to chip in for presents, so be it.
i like those thoughts in the middle. didnt think about cooking classes abroad for myself and putting the travel on it. i think we are all missing a big loop hole in the 529 plans here.
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Stevie. Why are you doing 529 then. It will be 19 years before our kids reach college. And I agree the landscape will likely be flipped on its head. I think a change in everyone going could change too
even if education won't be quite the same as it is now, my guess is that it will still be expensive. If my kid goes to trade school or gets scholarships, I'm covered. If not but another family member does go to a school like that, I can transfer to them.
If not, I can transfer to myself and take cooking classes in italy through an american university. since it's a school, travel and related expenses are educational expenses. so I can go back myself and travel for free ;) I don't know that I'll always work in higher education, and not sure I'd recommend my career path for my kid, so not banking on him coming here for free.
I don't know what's going to happen, but I know the best time to plant a tree is 20 years ago. I can stomach the 100/month now, and if it starts to look like I won't need it, I'll throttle back.
WE're not as militant as many on this board, but we did buy less house than we could afford, drive used cars, save a bunch each month, etc. I think not using the money for education and taking the 10% hit will be worth it for 2 decades of tax free growth. Not sure, but only one way to find out. Putting some in regularly should lead to growth, and if my parents want to chip in for presents, so be it.
i like those thoughts in the middle. didnt think about cooking classes abroad for myself and putting the travel on it. i think we are all missing a big loop hole in the 529 plans here.
529 plans for adults?? -- https://www.wsj.com/articles/SB10001424052748703818204576206970450531078
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One little guy here, 5 months old now. We're putting $100/month into a 529 for him, plus cash gifts from grandparents.
My back-of-the-envelope math says this will add up to $50K-ish by the time he's college age, which I think is a reasonable amount. It's possible that college as an institution will have changed drastically by then - maybe we'll have socialism and public college will be free, or maybe it will all be over the internet for cheap - and we don't want to oversave and then not have access to that money ourselves. You can take out a loan for college, but you can't take out a loan for retirement. Plus, if need be, we can always give him more money from our own taxable accounts.
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We have one 6 month old. We're planning on $5k/yr. With compound interest around 4%, that should come to $120k to cover room/board for 4 years at a reasonable college. Grad school we will probably cover separately when the time comes.
Isn't it amazing how compound interest works? Such a small amount of money each year will cover them for years.
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We have one 6 month old. We're planning on $5k/yr. With compound interest around 4%, that should come to $120k to cover room/board for 4 years at a reasonable college. Grad school we will probably cover separately when the time comes.
Isn't it amazing how compound interest works? Such a small amount of money each year will cover them for years.
This is poor compounding. 5k for 18 years and only 120k. Even if you only assume 5% real returns that should be almost 150k in today dollars.
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My wife and I have mixed feelings. I think we should help the kids as much as possible and she thinks that they need to be primarily responsible. I do see the value of them having skin in the game.
I read an article years back about a dad that would take whatever spare change he has in his pocket at the end of the day, and put it in their kids' college fund. It may not seem like a lot, but it adds up over time when invested halfway decently. I started doing that, as well as a few bucks here and there. Grandparents have contributed a bit. The kids are still over a decade away from school, but have about $5-6k. By the time they hit that point (hopefully well before) our house will be paid off, so we will be able to help a little more as well.
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My wife and I have mixed feelings. I think we should help the kids as much as possible and she thinks that they need to be primarily responsible. I do see the value of them having skin in the game.
I read an article years back about a dad that would take whatever spare change he has in his pocket at the end of the day, and put it in their kids' college fund. It may not seem like a lot, but it adds up over time when invested halfway decently. I started doing that, as well as a few bucks here and there. Grandparents have contributed a bit. The kids are still over a decade away from school, but have about $5-6k. By the time they hit that point (hopefully well before) our house will be paid off, so we will be able to help a little more as well.
If people are interested in this method, but don't use cash often, you could use Acorns. I've been using it for a year now, and have saved ~$1000. Although, I keep pulling the money out of it to pay off debt. Eventually I'll let it grow there, or pull it out to put it into my Son's 529.
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Side note question - I haven't put a lot of research into the financial aid situation. Several co-workers are saying that I'll be essentially forced to pay for my 3 kids college. Is that true?
What I've been hearing is that we most likely will not qualify for financial aid, and that if they want student loans, they will be private and i'll be forced to co-sign. True?
Of course I'm hoping they'll have scholorships and all that - but if not I'm troubled by having to consider being on the hook for all of their college costs.
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Side note question - I haven't put a lot of research into the financial aid situation. Several co-workers are saying that I'll be essentially forced to pay for my 3 kids college. Is that true?
What I've been hearing is that we most likely will not qualify for financial aid, and that if they want student loans, they will be private and i'll be forced to co-sign. True?
Of course I'm hoping they'll have scholorships and all that - but if not I'm troubled by having to consider being on the hook for all of their college costs.
I think your coworkers are likely talking about this in the instance that you would cosign for your child's loans. I don't think that's necessary. My parents didn't cosign any of mine.
As far as FinAid goes, I'd be surprised if any Mustachian qualifies, but student loans are separate entities.
Either way, if you've got a while until your kids head to college, this may all be meaningless speculation, as the landscape will undoubtedly change in the next decade.
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My wife and I have mixed feelings. I think we should help the kids as much as possible and she thinks that they need to be primarily responsible. I do see the value of them having skin in the game.
I read an article years back about a dad that would take whatever spare change he has in his pocket at the end of the day, and put it in their kids' college fund. It may not seem like a lot, but it adds up over time when invested halfway decently. I started doing that, as well as a few bucks here and there. Grandparents have contributed a bit. The kids are still over a decade away from school, but have about $5-6k. By the time they hit that point (hopefully well before) our house will be paid off, so we will be able to help a little more as well.
If people are interested in this method, but don't use cash often, you could use Acorns. I've been using it for a year now, and have saved ~$1000. Although, I keep pulling the money out of it to pay off debt. Eventually I'll let it grow there, or pull it out to put it into my Son's 529.
I looked into Acorns, but they did not work with my bank and doing it manually doesn't really differentiate it from any other service, so I let it be. I like the concept though.
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Side note question - I haven't put a lot of research into the financial aid situation. Several co-workers are saying that I'll be essentially forced to pay for my 3 kids college. Is that true?
What I've been hearing is that we most likely will not qualify for financial aid, and that if they want student loans, they will be private and i'll be forced to co-sign. True?
Of course I'm hoping they'll have scholorships and all that - but if not I'm troubled by having to consider being on the hook for all of their college costs.
That will depend very much on your financial situation. You can google for information about the FAFSA, and what counts and doesn't count as being "available" for your child's tuition. It gives a number called the estimated family contribution or EFC. It depends on your kid, their grades, their interests, their demographics, where they apply.
In general, if your kids have great grades and test scores, they will get more financial aid from less competitive schools, who will want to attract them. Some schools offer financial aid (some of which may be loans) to bridge the gap between what the sticker price is and what the EFC is. There is very little merit aid in our state system unless you meet very specific criteria.
I've got one in college. Most of my friends were shocked when they found out what the FAFSA calculates their "estimated family contribution" should be.
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$100 per month for each kid (which we started around age 3 months), supplemented by occasional lump sums deposited from credit card rewards, tax refunds, or bonuses from work. Our plan is to be able to fund tuition and books for 4 years to an in-state school. They will be expected to have jobs for spending money, and for living expenses if they choose to live away from home. As long as they are working and earning good grades, they will have the option of living at home for free while attending school.
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$550/month per kid into 529 account. Two kids - ages 4 and 5. Our basic target is to have 250K in each account by age 22 (realizing they would be spending it during college, but I like simple math).
One of the greatest gifts our parents gave us was a fully funded education- to the best schools we could get into. We want our kids to have that opportunity as well. As for having skin in the game, it is our job as parents to ensure they understand their future is dependent on them taking advantage of the opportunity we will give them.
If it works out that they don't need/use that money, then it will keep rolling in the 529 for their kids.
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$550/month per kid into 529 account. Two kids - ages 4 and 5. Our basic target is to have 250K in each account by age 22 (realizing they would be spending it during college, but I like simple math).
One of the greatest gifts our parents gave us was a fully funded education- to the best schools we could get into. We want our kids to have that opportunity as well. As for having skin in the game, it is our job as parents to ensure they understand their future is dependent on them taking advantage of the opportunity we will give them.
If it works out that they don't need/use that money, then it will keep rolling in the 529 for their kids.
Wow... That's pretty generous.
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We did $10k as soon as kid was born and have invested it in vtsax. By calculations, it should grow to 20k by the time kid hits college age. But since there are too many unknowns (kid might go to college outside US, kid might go the nontraditional route) we decided not to invest anymore. We plan to do the same for future kids as well.
Also we'll fully fund undergrad for kids. Grad school, I'm hoping they come to US and get scholarship/use their 529s.
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We did $10k as soon as kid was born and have invested it in vtsax. By calculations, it should grow to 20k by the time kid hits college age. But since there are too many unknowns (kid might go to college outside US, kid might go the nontraditional route) we decided not to invest anymore. We plan to do the same for future kids as well.
Also we'll fully fund undergrad for kids. Grad school, I'm hoping they come to US and get scholarship/use their 529s.
You expect 4% growth for 18 years? That sounds a little low to me.
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Enough to max out the matching on our Registered Education Savings Plan (we're in Ontario, Canada). About $210 a month (that's our contribution monthly, with extras periodically from relatives etc).
It takes most of his (tax-free) Child Care benefit to contribute this amount, and I think it's enough to give him a good start without paying for absolutely everything.
That's what we're doing too (Manitoba) - tossing the Child Care benefit into an RESP for our kids and letting the government provide a 20% return on the money that we already got from them :) We're putting in $275/child each month, as we have room from previous years to catch up on, but once we're caught up we will only contribute enough to get the government match.
My philosophy is that while I will support my children in their post-secondary schooling, I won't be paying their full education costs because it is an opportunity for them to learn about how to manage their finances. I went into a four year degree with enough savings to pay for one year. The rest was paid for through a combination of employment income and a student line of credit. I'm still reaping the rewards of that LoC a decade later with my excellent credit rating (due to having to pay monthly interest payments all the way through). It also forced me to budget for debt repayment once I got out of school.
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We did $10k as soon as kid was born and have invested it in vtsax. By calculations, it should grow to 20k by the time kid hits college age. But since there are too many unknowns (kid might go to college outside US, kid might go the nontraditional route) we decided not to invest anymore. We plan to do the same for future kids as well.
Also we'll fully fund undergrad for kids. Grad school, I'm hoping they come to US and get scholarship/use their 529s.
You expect 4% growth for 18 years? That sounds a little low to me.
I hope that's low!
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Till now, I haven't started savings for my children. But now, after seeing all yours posts I think I should have started the savings a few years back.
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A friend convinced me to start a 529 when my son was born last year so "that other family members could contribute." So I did and then my husband and I looked around at our family members...
When we stopped laughing we realized that it will make a great teaching tool through our son's life. Like the small amounts he gets at birthdays or whatever, he can put 25% into the 529 and he will see how much it adds up for schooling. He will help pay for it this way, plus working, plus any loans/scholarships.
That said, I also put in $50 a month, the minimum amount required to do automatic deposits. It's a pretty minor sacrifice for a pretty big payoff as the returns add up over 17 yrs. We do not get any tax benefit in California. We have no intention of fully funding our kids schooling, but if we can afford it at the time we will. Since my husband is self employed, we put mass amounts ($28k or more) into his SEP IRA every year and will pull from there if we are FIRE and feel it is necessary 17 yrs from now.
And like everyone says, maybe I'll use it for myself to get a master's once I'm retired, just for funsies :)
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I've recently have been considering opening 529 plans for my 3 kids (9,6,18 months). MA just started for 2017 allowing a tax deduction for $1000 for single, $2000 for married for contributions. So far it's only going to be a deduction for 4 years. Am thinking of taking advantage of this while we can. Any one familiar with MA 529 plans?
Other than doing this, we are not saving for the kids college, for all the reasons already noted by others. They each have an savings accounts for any money they may receive as gifts, which never more then $50 to $100 max. Just recently I opened a vanguard account in my name for each of them and put some of their money in it invested in an index etf. When they are older and need it I'll transfer it back to them. They don't have much but I figured in the long run it will be a better return then just sitting in the bank.
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Basically $0. The cost/benefit isn't there anymore. If my kid really wants to be something that REQUIRES a degree/license, etc, then we'll figure it out. But to me, the cost of universities now makes it a scam. I have much greater interest in showing my kid how to make money, entrepreneurial activities and the benefits of working for yourself. etc etc.
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I do $300 per month for three kids, plus $10k per year lump sum divided between them. My goal is to fully fund four years at our flagship state university tuition, room and board. Any difference from going out of state or to a private school will need to be made up through work, scholarships, grants, or loans. My kids are 13, 9, and 1 and so far I'm on track to meet that goal. Every year I check the cost of attendance at the state flagship university and adjust the plan as needed.
As some others have mentioned, part of the plan is to free up cash flow by having the mortgage paid off before my 13 year old heads off to college. So the savings plus cash flow will be used to fund college for the three.
Also, Slate-WA, your friends are right that you could need to co-sign loans for your kids to attend certain schools. If your income is high, and your EFC (expected family contribution) is high, your kids can only get limited loans on their own. I think it's about $30-$35k total now? If they want to go to a school that costs more, and your EFC says you can "afford" it (notice how that's in quotes), then their only option will be private loans that you co-sign. The government sees paying for college as part of a parents responsibility, and it doesn't care if a parent has decided that they won't pay. The parents income and assets will count against the child for the purposes of calculating aid.
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I do $50 per pay period for each kid. Also dump in $200 for birthdays and sometimes Christmas, and grandma will dump some in on holidays as well.
Started my oldest's at 1.5 years-old and at 5.5 he now has a little over $8000. I started the 8 month old's at birth and she already has over $1100.
I'll keep it that way for the near future. Like many on here are saying, no one knows what's going to happen with college costs in the next 10-15 years. I just can't see myself pushing one of my kids into an undergrad program that will cost over $100k. That just seems ludicrous to me.
This is a little off topic, but I looked up the local IBEW apprenticeship program the other day and oh how I wish I would have gone that route. They don't make nearly what I do today, but you can start at 18-19 and are making decent money a few years later (link below). I didn't really get my professional career started until I was 28.
http://www.topekaelectricaljatc.com/current_apprentice_information
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Side note question - I haven't put a lot of research into the financial aid situation. Several co-workers are saying that I'll be essentially forced to pay for my 3 kids college. Is that true?
What I've been hearing is that we most likely will not qualify for financial aid, and that if they want student loans, they will be private and i'll be forced to co-sign. True?
Of course I'm hoping they'll have scholorships and all that - but if not I'm troubled by having to consider being on the hook for all of their college costs.
I can tell you from personal experience it's probably true if you have any sort of savings and median income in the US. My parents made 55k a year, mostly my fathers pension and disability, had ZERO savings, credit card debt and lived in a state where their property taxes alone were 7k a year. Financial aid told me they should be responsible for 80% of my college tuition on their household salary. They could barely pay their bills, the idea of paying 80% of my college tuition was out of the question.
The only thing I was offered was subsidized student loans of 4-8k depending on year that they had to cosign for. The other loans I had to take out were all private (state program but private loans NJCLASS) and they had to cosign for all of those as well to the tune of close to six figures. I qualified for work study one year, but made more waiting tables so turned it down. I qualified for minimal scholarships as I wasn't very sports or arts inclined and didn't care enough about school in High school to have a 4.0 (I was a solid B+ student just never studied).
After I got my first job, and made a year of on time payments while living on my own, I was able to refinance the loans to my name only and remove my parents as cosigners which was a condition of their cosigning for me. Best thing my parents ever did force me to choose a major that I had VERY little interest or knowledge in, but that they knew I could get an actual job with.
So yea, if they aren't rockstar students, or have skill in an under served sport, you will probably be on the hook for a chunk of their costs through cosigning. Make sure your kids are reliable. My niece asked my parents to cosign hers, my parents knew how her mother was (bankrupt 4 times) and said no. The other grandmother cosigned and is paying that price as my niece took 130k out for a nutrition degree...so yea, at 25k salary a year can't pay the loans, or even the interest on the loans. DH and I routinely get collectors calling OUR house across the country, looking for her and the grandmother.
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Till now, I haven't started savings for my children. But now, after seeing all yours posts I think I should have started the savings a few years back.
Maybe they'll be athletes or rock stars or marry young? College isn't for everyone. :D
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$100 per month for each kid (which we started around age 3 months), supplemented by occasional lump sums deposited from credit card rewards, tax refunds, or bonuses from work. Our plan is to be able to fund tuition and books for 4 years to an in-state school. They will be expected to have jobs for spending money, and for living expenses if they choose to live away from home. As long as they are working and earning good grades, they will have the option of living at home for free while attending school.
Very similar to us. Our son just turned 2. We are contributing $300 per month to a 529 with state income tax advantages. We live in a college town with no plans to move elsewhere. Plan is to pay for tuition at a 4 year state school. He can live at home for free or he can pay for living costs on his own if he wants to move out on his own. Hopefully he will choose the free option to live at home.
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(In Canada) I put $200 a month into an RESP for our kid, have been since (her) birth. The government adds $40 to our contribution each month. I figure it will add up to at least $60k by the time she turns 18 which is more than enough for a local college or university, if she needs more than that she is going to need to get a scholarship or use some of her own money from working.
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(In Canada) I put $200 a month into an RESP for our kid, have been since (her) birth. The government adds $40 to our contribution each month. I figure it will add up to at least $60k by the time she turns 18 which is more than enough for a local college or university, if she needs more than that she is going to need to get a scholarship or use some of her own money from working.
We do the same for our two little ones, works out to a little over $400/month total, but gotta love that 20% government grant!
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We have 2 kids aged 3 and nearly 6. We put $400 each, $800 total per month in ibonds and have been since about 2 years before the oldest was born. Interest earned on ibonds is tax free if used for education. It also doesn't have to be used for education at all if they choose another path or if, as we suspect, Grandma and/or Auntie has a fund going for them as well (they will be the only grandchildren on my husband's side). We also have a couple of rental properties that will be completely paid off long before they start college that we can tap the cash flow or equity in order to help pay for college if need be.
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(In Canada) I put $200 a month into an RESP for our kid, have been since (her) birth. The government adds $40 to our contribution each month. I figure it will add up to at least $60k by the time she turns 18 which is more than enough for a local college or university, if she needs more than that she is going to need to get a scholarship or use some of her own money from working.
We do the same for our two little ones, works out to a little over $400/month total, but gotta love that 20% government grant!
Not to mention that what I put in before the 20% match is just basically coming straight out of the UCCB we get, so yeah, no complaints here! :)
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We have 2 kids aged 3 and nearly 6. We put $400 each, $800 total per month in ibonds and have been since about 2 years before the oldest was born. Interest earned on ibonds is tax free if used for education. It also doesn't have to be used for education at all if they choose another path or if, as we suspect, Grandma and/or Auntie has a fund going for them as well (they will be the only grandchildren on my husband's side). We also have a couple of rental properties that will be completely paid off long before they start college that we can tap the cash flow or equity in order to help pay for college if need be.
this is insane ... youre losing a lot of returns putting 800 a month towards that IMO. why not in the stock market. who cares about the taxes when you make piles more. than that small interest.
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None.
They can pay their own way by going to getting scholarships, or going to community college and working full-time, or by starting a business instead.
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Of course, now that I told my husband I started a 529 for our baby, he thinks we should put in more. I disagree, mostly because I think kiddo can either figure out the rest by then, or we should be so well off that we can help out just out of pocket. But I also tried to explain how I'd rather pump that money into our IRAs and we could pull it out if we wanted to. So help me get the laws straight. If we use:
529--no taxes, no penalty
SEP IRA--pay taxes on all money taken out, but no penalty
Traditional IRA--pay taxes on all money taken out, but no penalty
Roth IRA--no taxes, no penalty
401k--no taxes, no penalty, you take the money out as a loan and pay back with interest (which you keep)
We have all of the account above, all with various amounts in them. My husband is no longer at the company he got the 401k from but it was so large he didn't have to move it so he didn't bother (I want to change this some day)
Is that all correct? What would be the smartest to draw from?
Again, not planning to, but if we are FIRE without using those accounts at that point in our lives it might make sense.
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We have three kids 6, 4 and 2 and we are putting in ZERO. My priority is to ensure that our retirement is covered and we will not be dependent on our children as we age. We also prioritized having one SAHP and have decided to homeschool them. The plan is to expose them to as much as we can at an early age so they have a good idea what they want to do in terms of career/job and how to be self sufficient once they turn 18 or earlier.
If it seems like they will be going the college route then we will structure our income to minimize it so that we minimize the expected family contribution (EFC), if we are not FIRE yet. We will also guide them to earn as many college credits before they even go via AP classes or CLEP. Have them apply for as many scholarships and work study as possible and if it is still not fully covered then we might cash flow some of it with full-time or part-time work between the wife and I.
Just like retirement we do not plan to follow the standard plan of saving and paying full price for their college education if they want to go that route.
We have almost the exact same life situation and the exact same plan. Virtual high five!
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We have 2 kids aged 3 and nearly 6. We put $400 each, $800 total per month in ibonds and have been since about 2 years before the oldest was born. Interest earned on ibonds is tax free if used for education. It also doesn't have to be used for education at all if they choose another path or if, as we suspect, Grandma and/or Auntie has a fund going for them as well (they will be the only grandchildren on my husband's side). We also have a couple of rental properties that will be completely paid off long before they start college that we can tap the cash flow or equity in order to help pay for college if need be.
this is insane ... youre losing a lot of returns putting 800 a month towards that IMO. why not in the stock market. who cares about the taxes when you make piles more. than that small interest.
Well... diversification for one thing, I suppose. This obviously isn't our whole investment picture. What if I told you the ibond "fund" total represents about 3% of our total net worth today? We did decide to use about half of the ibond fund as part of the down payment on a rental house investment a couple of years ago with the idea that we could sell the house to (easily) fund college in 12-15 years. Who knows, we may do that again with more of the bonds if an excellent buying opportunity comes along again.
FWIW, we chose this particular course of action (ibonds as an emergency fund, turned college fund if we never needed it) pre-mustachian when we were both employed at the same company in risky independent contractor positions around the 2009 time frame. We were already investing heavily in the stock market and this was a compromise on not just having a large emergency fund sitting in cash (what hubby wanted) that we wanted easily accessible in case of extended layoff without risk of losing principal or eroding due to (predicted at that time) runaway inflation. I have actually brought up the idea of changing this particular part of our investment plan recently with my semi?-mustachian hubby but he likes things the way they are. He is more risk averse than I am and I can respect that.
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^^^ to slate-wa who asked about loans -- the feds are being smart with student loans. They will allow a kid to only take out around $27K in four years; freshman year starting around $5500 and going up to around $7K senior year. Any more than that is a parent-plus loan; co-signed by parents.
When you hear of kids with massive student loan debt, its the PARENTS who enabled this and co-signed and are on the hook as well.
We have two in college now. the hardest part is paying for the living expenses. 1 kid is at a small college and its mandatory to stay in the dorms and pay for food plans; around $10K per year. No options at this school. Other kid lives in a frat; between them we pay $19K for R&B. R&B is pricey everywhere.
please know that there are very very few "full-ride" scholarships that will pay for your kid's R&B at college. Schools don't need to pay for that; and they make a little $ on R&B. The full-ride scholarships are often for elite athletes, and tippy top academic kids going to colleges that have lower rankings, trying to "buy" higher rankings by attracting the super smart kids.
State colleges think that a kid can work and contribute $3K per year and have a loan around 6$K = about $9k/yr. Above that it's on the parents. Usually the best FINANCIAL option is to live at home, and attend local Community or State College. But that's not always the best choice for the kid of course (eg: daughter is going into a field that is not offered anywhere around us). There is no way i believe college will ever be free for all.
Just keep saving! and if your kid is smart, get test prep.
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We started with maybe $100/mo in Vanguard before I ever got pregnant, then started a 529 in the state we were in at the time. Caveat that we had no debt (except mortgage) and maxed out retirement options before investing a cent toward college. Then we moved to a state with a $2500/kid tax deduction, so we started off with one account for each kid at I think $250/mo (we rounded up). Then a few years ago I realized the tax deduction is per parent, per kid, so we opened two more 529s in my name. So as of today, it is a total of $1K/mo, with $10K of that being tax deductible; I think the accounts are around $140K for our oldest and $100K for the youngest. We also continued the Vanguard -- that way it's there if we need it, but easily accessible for us if we don't.
Education is a big deal in our family; it was the path to the MC/UMC on both sides, and my mom and stepdad were both professors. But the financial world has changed -- back in the day, my SLAC was $10K/yr, including room and board; now it's almost $65K. Meanwhile, the merit scholarship I got has gone from $2K to $2750, and the max federal loan went from $2500 to I think maybe $5k. So the delta just at my alma mater has gone from around $5K to $55K.
I am also not assuming *any* aid -- it is just not realistic. We will certainly look at cheaper schools, but DD has some challenges that make "fit" and environment really important to me. Which means either save a buttload of money or tell her to take out giganto loans. And given that DD wants to go to med school and is going to be on the hook for that to the tune of six figures, I'd rather her not go into that already owing six figures of debt that can't even be discharged in bankruptcy.
All of which leads me back to: we are preparing to spend a lot more money on higher ed than many people here, and I am ok with that.
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tl;dr: $0
DD is only 2, but so far we haven't put anything away specifically for college, and I'm not sure that we will. We've got 457s, though, which we'll have access to assuming we're no longer working (or at least no longer working in our current jobs). Plus, my dad has started a 529 for her (and his other grand kids) and she's got about $24000 in there. He's close to retirement, so I'm not sure how many more contributions there will be, but that's a nice start.
Fundamentally, though, DW and I aren't in favor of spending a ton of money on education. I went to a fancy liberal arts school because my dad worked there and I got free tuition. She went to a good state university on scholarships and pre-paid tuition. We've opted out of pre-paid because 1) it's state specific and 2) they keep adding "fees" that your pre-payment doesn't cover (here in FL).
For grad school, I was fully funded and DW worked and got some loans. As a university employee (faculty administrator) I don't really subscribe to the idea that everyone should get a bachelor's degree, particularly in a liberal art (and I say this as an English major). And I absolutely advise against grad degrees without a very clear (and realistic) professional goal. When DD is old enough, we'll encourage her to consider a variety of options -- if scholarships are available to her (here in FL we have "Bright Futures" based on a combo of grades and test scores) and if she's interested in a major with decent job prospects, then a four year college might be a good option. If she doesn't, I'd recommend doing the first two years at community college, if she really wanted a 4 year degree. And I absolutely expect us to have enough of a stash to help out (or fully pay for) college should we want to. But we aren't so dead set on doing it that having college-specific accounts is a priority.
I went to school and got an English degree because going to school was "normal" and English was what I liked. I don't think either of these were necessarily good decisions (although it worked out fine). And they definitely weren't a good reason to spend a bunch of money.
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"Basically $0. The cost/benefit isn't there anymore. If my kid really wants to be something that REQUIRES a degree/license, etc, then we'll figure it out. But to me, the cost of universities now makes it a scam. "
DS#2 is a High School senior- touring some of these beautiful facilities illustrates why the COA is between $68 and $71,000. How can they justify that? It's a scam and I hope it topples soon.
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We have four kids. One is now a freshman in college and another will start this Fall. Way back when, we put in about $100 per month. Things really do change over the years. One is attending a private university and received some very nice scholarships. We used some of the money we had invested for him, sold some stock, he worked, and used some of our dividends. We do not want him to take on any more debt his remaining three years. So, it will be done with a mix of the money we invested for his college, dividends we receive on other investments for our retirement, our income tax refund, the education tax credit, and him working.
Our other son plans to attend a community college--he does not want to go 4 years, just 2 years. We also saved about $100 per month over the years--and actually stopped contributing to it a few years ago. The money we invested for him over the years will pay for him to attend 2 years at a community college. He is planning on living at home the first year, which will also cut way down on expenses. He also has been working part-time and we will ask him to contribute some of his earnings.
Our other 2 younger children also want to attend a community college. Same thing--we've just been putting $100 away for each of them.
I really think as children get a little older, say age 8-10, you really know their strengths and if they would be a good fit for a 4-year college. We have always "promoted" education, but there are lots of options out there for those kids who do not want to attend a 4-year college. Also, there are lots of kids out there who want to go, but either they or their parents have no plan on how to pay and so what happens is the massive amounts of debt we are seeing in our culture.
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I'm putting in $200/mo*2 kids - I've got a separate 529 for each of them.
After I'm done paying down debt, I'll still have ~10 years until my first reaches college. Then I'll up contributions so I can get closer to the expected cost of a public university.
I plan on offering my kids the same deal my father offered me: I have enough set aside for four years at a public state school. If you go to a more expensive school, you pay for it. If you get scholarships, you get the money.
Despite the divorce agreement stipulating that we'll each pay 50/50 for college, I'm not counting on her to have anything to contribute - and it is important to me that I'm able to offer my kids what my father offered me.
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We have 2 kids aged 3 and nearly 6. We put $400 each, $800 total per month in ibonds and have been since about 2 years before the oldest was born. Interest earned on ibonds is tax free if used for education.
Similarly to you, we invested in iBonds for some diversity and it is just a very small part of our investments. One thing I'd point out is that the tax free interest for education gets phased out at certain incomes, so you might want to keep that in mind.
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We have 2 kids aged 3 and nearly 6. We put $400 each, $800 total per month in ibonds and have been since about 2 years before the oldest was born. Interest earned on ibonds is tax free if used for education. It also doesn't have to be used for education at all if they choose another path or if, as we suspect, Grandma and/or Auntie has a fund going for them as well (they will be the only grandchildren on my husband's side). We also have a couple of rental properties that will be completely paid off long before they start college that we can tap the cash flow or equity in order to help pay for college if need be.
this is insane ... youre losing a lot of returns putting 800 a month towards that IMO. why not in the stock market. who cares about the taxes when you make piles more. than that small interest.
This is a great point at ages 2 and 4.... doesn't really matter when they are 15, though. The reduction of risk for less money starts to matter a lot when you are close to pulling out the money.
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Reading some of the huge savings goals that people have is a real shocker to me.
But, as I get to the point where my DD is applying for schools for next year, I realize that what she doesn't use, I get to keep for my use, or hold for her for another use (house, start a business, gap year of travel) at my discretion.
As long as we structure how we pull the saved money out of the RESP, that is!
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$0.
If we think it's worth helping out at the time, we will dip into our stash.