Paying for College
ALL PARENTS READ THIS! ALL OF YOU!
Now that I have your attention, I’d like to talk about your child’s college account. If you’re thinking ‘I don’t have a high school student, I don’t need to worry about that’, please read on anyway. If you have a child, you need to read this.
Every child should have a college account, period. The only caveat I’ll make is if your name is Trump or Buffett (Warren, not Jimmy). Trumps and Buffetts don’t have to have a college account. They have to have college TRUSTS! Everyone else – college account.
Lately, I’ve been flabbergasted with how often I hear students and their parents surprised at how much college costs, and wondering how they’ll pay for it. The parents act like nobody told them, when they had a baby, that they were going to grow up and want to go to college. They seem to be saying ‘Holy cow! Where did this come from’? And the students act like they’ve never asked who was going to pay for them to go to college.
Students, if you’re reading this, go find your folks and ask them about your college account. Ask them anything you want about college and money, but start the conversation.
Parents, you need to start that conversation too. But make sure you’ve got an answer to ‘How are we going to afford to send me to college?’. The answer, of course, is something like this: ‘We’ve got a college account for you with roughly x dollars in it, you have your college account that we started a couple of years ago (work out some sort of matching deal to get this started. i.e. you save $50 and we’ll match it.), you’ll be working summers and breaks, we’ll be applying for financial aid, hopefully you’ll qualify for some scholarships, and we’ll work out who pays for what once we see where you go to school and who much money is available’.
And exactly how big your college account is depends on tons of variables, but you HAVE TO SET SOMETHING UP and contribute to it regularly. Automatically is best, so you never actually see the money. Then increase the amount any time you can. Don’t worry if you’ll have saved enough to pay for all of college. Just save! Put it in a 529 plan, stocks and bonds, IRA’s, a bank account, CD’s, whatever! Just save, and commit to save as much as you can (however, not ignoring your own retirement in the process). Have a financial advisor help you choose what’s best for you. Tell family and close friends what you have set up so they can add to it if they like.
For most of us, it will be a conglomeration of different sources of funds that ultimately pays for our kids’ college, and that’s okay. Two things however, you must do: save and talk about it with your kid(s).
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