It’s almost June and, before you know it, my younger daughter will be starting kindergarten in the fall! It’s a cliché, I know, but kids really do grow up right before your eyes. It seems like yesterday that she was born and, in September, she’ll start heading down the rabbit hole towards college in the fall of 2030. (I can’t believe I just wrote that!)
Anyway, all that’s standing in the way of that happening (at least on my end) is fully funding her college fund (and figuring out how in the heck I’m going to fund her sister’s, too!) So how in the world are we going to get that accomplished? Here are the five pillars behind our plan:
Save aggressively in 529 plans
As soon as each of our daughters got their social security numbers, I opened up a 529 plan at T Rowe Price. I decided that I wanted the accounts in the same place as our other taxable accounts (PRWCX and PRINX, as I’ve discussed here before) and, because we weren’t sure if we would remain the state where my first daughter was born long-term (we didn’t), I didn’t want to run the risk of having to “give back” any tax benefits that we might accrue from using that state’s dedicated 529 plan.
After making sure we max out our retirement and other tax-advantaged accounts (like my HSA), we have prioritized our daughters’ 529 plans. We tilt the amount of contributions slightly in favor of our older daughter because she will attend college first, and we can always change the beneficiary to our second daughter if we have the fortunate problem of saving too much or she gets a scholarship or other financial assistance. And whenever the girls get money from grandparents or other relatives as a gift at holidays or on their birthdays, we also send it to the 529 plans.
Although we will continue to save aggressively, my personal belief is that the pricing structure for secondary education – college and graduate school – cannot continue indefinitely. Cheap money from the federal government has allowed these institutions to increase their payrolls and administrative bloat in a way that I just don’t think is sustainable. Even if I’m wrong, I would prefer to save more for college than necessary, and provide those funds for graduate school or even earmark them for grandchildren at some point in the distant future. Bottom line: provided you aren’t ignoring your own retirement goals, it never hurts to save more, especially because of the flexibility that 529 plans offer in terms of changing beneficiaries down the line.
Send them to public school
My wife and I both attended public elementary and high school – she went all the way through public college and graduate school, while I went to a private college. Property taxes in highly-rated public school districts are expensive these days, though, at least in the part of the country where our family lives. So private school layered on top of a public school system that we won’t use just doesn’t make any sense.
Even if living in a lower cost of living part of the country with “inferior” schools was an option for us (it’s not right now, for reasons I may get into in a future post), I still believe strongly that the quality of time you spend as a parent with your children is more important than what some website or magazine says in terms of ranking your public school district.
Public education will allow us to keep monthly cash flow open, and help us hit our savings and investing goals – including those for college. I think it’s the smart decision for us, but we’ll see how my older daughter does once kindergarten starts up this fall.
Invest in “meaningful” vacations and travel
I was reading a parenting article recently that talked about how to raise children to be adults in the modern world. One of the tips was to take them on “meaningful” travel – vacation that has a purpose, that isn’t blind tourism or a silly destination weekend. So when we earmark savings for vacations, my wife and I want to bring our girls to places that have meaning. Cities with history, maybe an international trip at some point in the future, and other travel where we will go to museums and attractions that have educational value and aren’t just mindless tourist traps.
Hopefully this will spark a lifetime love, for them, of exploring our world, expose them to different ways of living and points of view, and keep them from falling into thinking where they live is a bubble. I’m not saying we’ll never go to Disneyworld or Myrtle Beach again, but I want those types of trips to be the exception and not the rule for us.
Leave lots of books and newspapers around the house
I love to read and listen to music at home, which in reflecting on my own childhood seems incongruent. My parents, while both highly educated and committed to lifelong learning, never kept books around the house (like on bookshelves) and were not big newspaper or magazine people. They also almost never listened to music (although my Mom did pass along her love of talk radio to me).
So in thinking about how I want to raise my children, surrounding them with books and music is a priority. I will subscribe to major newspapers and magazines and keep bookshelves in our living and family spaces stocked with accessible titles from my own education and interests. My thought is that over time this will seem normal to them and spark interests that they might not otherwise have generated on their own.
Hint at my own education, but don’t hit my children over the head with it
My wife and I both had the good fortune of attending well-known undergraduate schools. My hope is that having done so will set a good example for our children and encourage them to study hard and value and pursue both higher and lifelong education like their mom and dad. At the same time, I don’t want our academic backgrounds to “scare” either of our children. I’m not sure I have a strategy for dealing with that yet, other than to just keep in the back of my mind and reassess the situation once our children get older.
If you have children, how are you saving for college? What do you think of my strategy? Did I miss anything?