What Financial goal should I have with paying for my children’s college?
When planning to pay for college for your children, I encourage you to establish clear goals. First, you need to determine if you want to have your child’s education be paid with or without the need for financial aid. If you do not want your child or yourself to be burdened with a loan to have to pay back, then set the goal of having enough money saved before they enter college so that the college is paid.
Who should pay for my children’s college?
As parents we feel motivated or obligated to take on the full responsibility of paying for our children’s college education. The second goal is to establish a clear understanding with your child that if they want a college education they should invest in it by saving for it with earnings from a job. If they invest in their education, your child will value it more.
What is an attainable financial goal?
Harvard cost $52,000 a year for the 2009 – 2010 academic year. Saving $208,000 based on current costs is not attainable for most people. The University of Florida cost $16,690 a year for the 2009 – 2010 academic year. Saving $66,760 based on current costs is more attainable. Florida International University total matriculation and fees are $4,580.38 a year for the 2009 – 2010 academic year. Saving $19,215.20 is even more affordable. I suggest that you set your goal on a specific college and save enough to cover the actual cost when your child enters as a freshman. Your child should consider a job on campus during the school year and summer jobs during the college years.
I have a 401k plan at work; can I set up amatching savings plan with my child?
Yes. If you can afford it and feel motivated to do so, you can match your childs earnings dollar for dollar. My son, Steven, did pizza delivery for 4 hours on Firday, Saturday and Sunday for a total of 12 hours a weekend. Back in 1995 – 1996 he earned $10 an hour which was $120 a weekend or $480 a month. I matched it $1 for $1. Our goal college was the University of Florida, and in 1996 the 4 year cost was $32,000. When he graduated from high school, we had $32,000 in the savings account. $16,000 he earned and $16,000 I matched. No financial aid was needed.
Does a Matching Savings Plan have other benefits?
The matching savings plan may create a new dimension in the relationship you have with your child. You become partners in achieving a long term goal. Your child should be motivated to in essence to earn twice as much as their pay check. Your child may begin to ask you how to red the account statement and how to invest the savings. Their buying habits may be influenced by their employment. Those $150 sneakers may mean 20 hours of their work so maybe they are not so motivated to buy them because it is not worth 20 hours of their life to have them after all. They may start to look for value in what they buy. They may even appreciate you a lot more for working for a living and paying the bills.
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