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Why You Should Save For Your Child’s College Education

May 22, 2017 By Omar

Since the beginning of May, we’ve been doing a series about college, money, and student loans. Kim shared several stories in this series, which if you haven’t already checked them out, don’t forget to do so.

  • How I Chose My College Major
  • Why I Didn’t Mind Paying Back My Student Loans
  • How I Paid Off $36,500 In Student Loans

When I was in middle school and high school I didn’t understand the purpose of getting good grades in school. My lack of understanding showed at the end of every semester too (lol)! It wasn’t until my later years that I made the connection between education and income. Luckily my dad was able to pull some strings at the college he worked for and get me in on academic probation. I didn’t have to pay tuition due to him being an employee of the college. I was lucky. Extremely lucky. It’s not likely my son will have the same opportunity to go to college for free. Your kids are more than likely in the same boat as well.

In wrapping up this series, I thought it would be a good idea to discuss why you should save for your child’s college education.

Why You Should Save For Your Child's College Education

More Opportunities (To Increase Income Sooner)

Most people would agree that a college education can be beneficial and lead to more opportunities, such as earning more income sooner. There are many studies that show that, on average, those with a bachelor’s degree will earn more than those who don’t have a degree. There are definitely outliers to this but it’s what I’ve experienced in my own life as well.

Taking this into consideration, most people would also agree that kids shouldn’t have to go into a large amount of debt just to go to college. Having student loans that will have to be paid back can hinder the opportunities that are afforded by going to college. It can make a college graduate feel like going to college was a waste of time, even if they chose a “good” major.

If we can give our son the opportunity to go to college this will allow him the chance to earn more income faster. And it’ll help even more if we can help him do this debt free (or almost debt free). In doing this, I see the opportunity for him to get to financial independence quicker than me. You might be thinking what does financial independence have to do with saving for a kid’s college education? Well, since the purpose of higher education is to gain skills that allow you to support yourself financially, why should one have to go into a large amount of debt to do so? And then struggle to pay it back?

Arming my son with the financial knowledge to get to financial independence, giving him the opportunity to graduate from college debt free, and the ability to earn more sooner will allow him to get to financial independence much sooner than I will. And don’t all parents want their kids to be better off than they were? This could not only impact him but several generations after him.   

Less Of A Burden

When your child graduates from college and starts his career, he’ll be making the least amount of money he’ll make throughout his career (hopefully). If he had to take out student loans to go to college, his student loan payment might be as big as a rent payment. This can force him to live at home until he can clean up the mess and then move out on his own.

When kids finish college they don’t need this debt as young professionals trying to find their way in the “adult” world. What would be better is if they could start their career and not have to worry about paying back a massive amount in student loans. They would be free to make the best decisions possible without the financials being the overwhelming determining factor of what they choose to do with the rest of their life.

Should You Save For Your Child’s College Education?

So, should you save for your child’s college education? I think you should do something if you can. With the two reasons I mentioned above, we decided that it was better to do something rather than nothing. I’ve realized how much of a blessing graduating from college without student loans has been to me. I’ve also experienced how hard it is to pay off student loan debt thanks to my lovely wife (lol). It isn’t fun… at all!

I would love to give our son the same opportunity to go to college, but there’s no telling how much school will cost in 15 years. Kim and I decided that we want to help our son as much as possible with school. We may not be able to cover all of it, but that’s not necessarily a bad thing. This means our son will have to get a job to pay for the remaining cost. I want our son to understand the importance of getting a college degree and how those skills will impact his ability to make a living. Having him take part in paying for his education is a good way to accomplish that. But having him come out of school with crippling debt isn’t an option for us.    

To accomplish our goal of doing something we decided to open a 529 through Fidelity. It’s the UNIQUE College Investing Plan. It isn’t a prepaid college 529. Instead, it’s the type of 529 where Kim and I pick the investments. We’ve been contributing each year into an index fund within the 529 since he was born. If you have kids you should do your research and decide what’s best for you in regards to saving for their college education. However, I encourage you to do something if you are able!

Keep This In Mind

I was listening to the Dave Ramsey show one day and a caller called in to ask Dave for advice on behalf of his parents. The caller was one of three kids whose parents took out student loans for all three kids to go to ivy league schools. His parents had borrowed around $90K for him to go to school and borrowed about the same amount for the other two kids. The parents went $270K in debt for their kid’s college and had no money set aside for their own retirement. 

Looking from the outside in, this looks like his parents didn’t make a wise decision at all. But all his parents wanted to do was provide them with a quality education. However, in the process, they didn’t realize that their first priority was to themselves. They may never recover from this mistake and the likelihood of them having to rely on their kids in their retirement is higher. 

The truth is that there are other ways to pay for college and cheaper colleges to go to that provide a quality education. This isn’t the case with retirement. It’s up to you to fund it. Don’t sacrifice your retirement for your kid’s education. You may end up being a bigger burden on them if you don’t have the money to take care of yourself.   

Kim’s thoughts: As we wrap up this series, you would think that with the stories I’ve shared and the amount of student loan debt I had to pay back, I would’ve been all about saving/paying for our child’s college education. However, that couldn’t be farther from the truth.

When Omar and I first discussed it I expressed how no one paid for my college education, and it worked out OK. It also made me realize that I needed to get in and out of college as quick as possible. I told him that I refused to pay for our child’s college education just for him to turn around and not do his best or flunk out at our expense. Omar understood where I was coming from just as I understood why he did want to save/pay for our child’s college education, especially given how expensive it’ll be by the time he is ready to attend college.

Thus the reason that we came to the compromise that we would save something since we are able to – meaning that we are out of debt ourselves and we’re saving for our retirement as well. We probably won’t pay for his entire college education unless it just so happens to work out that way, but I’m comfortable with our decision to help him help himself along the way.

What are your thoughts on saving for your child’s college education? 

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Filed Under: Personal + Finance Tagged With: college, money, student loan debt, student loans

See what’s happening on Instagram…

thinkingofsomeday

No long caption. I just wanted to make our last “mortgage principal payoff” calendar update. 😆 It’s been a month and it still feels surreal to us...
On Christmas Eve morning, Omar left out of the bed On Christmas Eve morning, Omar left out of the bedroom saying that he had to go work on something. When he came back he handed me a letter that said:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
“As I sit here on the edge of paying our home off I understand that it isn’t completely about us. Our job is to set the next generation up to do better than us, which makes me think of the generation before me. This final payment would not be possible without [Kim’s dad]. He spent his life working for this money and passed away before he got to use it for himself. We agreed to use that money in a way that would always honor him. So for the past 6 years it has funded our oldest son’s 529 [via the minimum required distribution]. Today, that money has grown enough to pay off our mortgage without touching the initial principal. Today we sever ties to debt forever. Today, we say thank you to [Kim’s dad] for the sacrifices he made and the foundation he laid that made it possible. THANK YOU!!”
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Of course after l finished reading the letter I was like... 🥺😭. Truth be told, I still kind of feel that way. It’s part of why it took so long to share the details of paying off our mortgage. Losing a parent is hard.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Pictured is my dad and I... my favorite picture of of us. He passed away 6 years ago on NYE. He was only 62. After he passed, I found out I was “entitled” to receive part of his pension. Omar and I decided to use some of this money to pay off our mortgage. This is how we were able to pay off most of our $54k balance 7 days into this year.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This is the short version, but if you want the full details, we wrote a blog post sharing:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• a recap of our initial mortgage payoff plan + payoff journey
• some background info about the pension + how we almost cashed it out when we first found out about it
• the breakdown of the $$ that it took to make this happen + why we did it this way
• how some things didn’t go as planned
• and each of our thoughts in regards to all of this
⠀⠀⠀⠀⠀⠀⠀⠀⠀
You can find the link in our bio.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
“In all that I do, I strive to make my parents proud. I like to think my dad would be damn proud of me... of us, for this one.” Kim #piecesofsomeday
#tbt To last Thursday (1/7/2021) when we became mo #tbt To last Thursday (1/7/2021) when we became mortgage free!! Yes, you read that correctly! We are 100% debt free! Like debt free, debt free. 🤣
⠀⠀⠀⠀⠀⠀⠀⠀⠀
To be honest, it’s been a week and it still doesn’t feel real to us yet. But it was real watching that money disappear from our account and no longer seeing our mortgage balance when we signed into our credit union account. We must say, our credit union works pretty fast! Lol.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We didn’t even get around to sharing our mortgage payoff goal for the year with one of the little cute pictures explaining how we were going to do it. But here’s a quick recap of the numbers that we were working with...
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• mortgage principal: $54,507.37
• mortgage interest: $35.84
• reconveyance fee: $69.00
• paying off our mortgage... definitely not priceless, but oh so worth it!! 😂🙌🏽
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We’ll share more in depth details soon because you’re probably wondering how we came up with that amount of money 7 days into January. It definitely wasn’t from hitting the lottery! Lol. But until then, just know that...
⠀⠀⠀⠀⠀⠀⠀⠀⠀
WE’RE MORTGAGE FREE!!! #piecesofsomeday
So we took some Christmas / family pictures back i So we took some Christmas / family pictures back in 2020 (as if that was so long ago), but I never got to share them. 😩 So here’s one. I actually like the fact that it’s in front of our house. #piecesofsomeday
⠀⠀⠀⠀⠀⠀⠀⠀⠀
And I also wanted to add that we finally did another blog post after quite some time. Maybe we’re the world’s worst bloggers. 🤷🏽‍♀️🤷🏽‍♂️ But if you’re interested, we’re sharing a recap of quarter 3 and quarter 4 from our mortgage payoff journey. We’re also sharing what our mortgage payoff goal is for 2021. We’re a bit excited about it! You can check it out at the link in our bio.
2020. This has been a year that I’m sure none of 2020. This has been a year that I’m sure none of us will ever forget. While this year has been ok for us for the most part, there are many people that it’s been a really really tough year for. Whether it’s been financially, emotionally, health wise, etc. etc. etc. So here’s to hoping that next year will be much much better, for everyone, but especially for those who had a tough time this year. ✨♥️
We started 2020 off with owning 43% of our house a We started 2020 off with owning 43% of our house and we now own 69% of it. We had paid off 39% of the mortgage loan and we’re finishing the year out at having 66% of it paid off. (These 2 numbers are not the same for us because of our 5% down payment as well as when we refinanced to a 15-year mortgage.) It’s been really exciting to see these numbers increase this year.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
(Annnnnd this concludes our December numbers. I can’t believe I managed to share them all before the end of the year!! 😂)
Q4 was our best quarter by far, mostly due to the Q4 was our best quarter by far, mostly due to the RSUs that we were able to use. However, even if we hadn’t been able to use them, Q4 would have still wrapped up nicely thanks to us still being able to stick to our 70/30 plan.
For December we were able to color in 4 rectangles For December we were able to color in 4 rectangles. This puts our mortgage balance for the end of 2020 at $54,507.37.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• 132 rectangles total
• 88 rectangles colored in
• 44 rectangles to go!!
The total of our mortgage principal payments for D The total of our mortgage principal payments for December was $3514.74.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
$995.13 came from our regular payment and $2519.61 came from our budget.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This put us at meeting our second stretch goal of putting a total of $45,000 towards our mortgage principal for the year! Yes, we did a little magic with our budget in order to get it at exactly $45k, but I’m sure that’s what we all do in when we’re trying to hit a certain number!! Haha.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We’re soooo happy that we were able to meet this goal because we really weren’t sure if it was going to be possible or not!
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Comments

  1. My Sons Father says

    May 24, 2017 at 12:14 am

    Great post Omar! I think this is an easy thing to put off because there are so many other demands for your money, but totally agree that putting something (no matter how much) is the way to go. Time goes by fast when you have kids, so it’s easy to convince yourself you have the time, but really they’ll be off to college before you know it.

    • Omar says

      May 24, 2017 at 6:47 pm

      Exactly. I definitely agree that it’s easy to put it to the aside with the intention of doing it later. My kid is about to turn 3 this year. It feels like I just brought him home from the hospital though!

  2. Kris says

    June 12, 2017 at 2:01 pm

    If you can help contribute to your child’s college fund then you should definitely take advantage of it. We all want our kids to be better off than us and one of the ways you can steer toward that direction is to help pay for their education.
    I opened up a 529 account for our 1 year old a few months before he was born and we are fortunate that both parents have already contributed a good amount into that account. Me and my wife make monthly contributions to it and very delighted every time the amount goes up because we know that contributing more and more will make it a bit easier to pay for his college. We hope the goal is to fully pay for our kid’s college but paying a good amount of it will be as great.

    • Kim says

      June 12, 2017 at 3:24 pm

      That sounds good, Kris! It’s nice to see more and more people become aware of thinking about not only their future but their kids’ futures as well.

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See what’s happening on Instagram

thinkingofsomeday

No long caption. I just wanted to make our last “mortgage principal payoff” calendar update. 😆 It’s been a month and it still feels surreal to us...
On Christmas Eve morning, Omar left out of the bed On Christmas Eve morning, Omar left out of the bedroom saying that he had to go work on something. When he came back he handed me a letter that said:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
“As I sit here on the edge of paying our home off I understand that it isn’t completely about us. Our job is to set the next generation up to do better than us, which makes me think of the generation before me. This final payment would not be possible without [Kim’s dad]. He spent his life working for this money and passed away before he got to use it for himself. We agreed to use that money in a way that would always honor him. So for the past 6 years it has funded our oldest son’s 529 [via the minimum required distribution]. Today, that money has grown enough to pay off our mortgage without touching the initial principal. Today we sever ties to debt forever. Today, we say thank you to [Kim’s dad] for the sacrifices he made and the foundation he laid that made it possible. THANK YOU!!”
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Of course after l finished reading the letter I was like... 🥺😭. Truth be told, I still kind of feel that way. It’s part of why it took so long to share the details of paying off our mortgage. Losing a parent is hard.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Pictured is my dad and I... my favorite picture of of us. He passed away 6 years ago on NYE. He was only 62. After he passed, I found out I was “entitled” to receive part of his pension. Omar and I decided to use some of this money to pay off our mortgage. This is how we were able to pay off most of our $54k balance 7 days into this year.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This is the short version, but if you want the full details, we wrote a blog post sharing:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• a recap of our initial mortgage payoff plan + payoff journey
• some background info about the pension + how we almost cashed it out when we first found out about it
• the breakdown of the $$ that it took to make this happen + why we did it this way
• how some things didn’t go as planned
• and each of our thoughts in regards to all of this
⠀⠀⠀⠀⠀⠀⠀⠀⠀
You can find the link in our bio.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
“In all that I do, I strive to make my parents proud. I like to think my dad would be damn proud of me... of us, for this one.” Kim #piecesofsomeday
#tbt To last Thursday (1/7/2021) when we became mo #tbt To last Thursday (1/7/2021) when we became mortgage free!! Yes, you read that correctly! We are 100% debt free! Like debt free, debt free. 🤣
⠀⠀⠀⠀⠀⠀⠀⠀⠀
To be honest, it’s been a week and it still doesn’t feel real to us yet. But it was real watching that money disappear from our account and no longer seeing our mortgage balance when we signed into our credit union account. We must say, our credit union works pretty fast! Lol.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We didn’t even get around to sharing our mortgage payoff goal for the year with one of the little cute pictures explaining how we were going to do it. But here’s a quick recap of the numbers that we were working with...
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• mortgage principal: $54,507.37
• mortgage interest: $35.84
• reconveyance fee: $69.00
• paying off our mortgage... definitely not priceless, but oh so worth it!! 😂🙌🏽
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We’ll share more in depth details soon because you’re probably wondering how we came up with that amount of money 7 days into January. It definitely wasn’t from hitting the lottery! Lol. But until then, just know that...
⠀⠀⠀⠀⠀⠀⠀⠀⠀
WE’RE MORTGAGE FREE!!! #piecesofsomeday
So we took some Christmas / family pictures back i So we took some Christmas / family pictures back in 2020 (as if that was so long ago), but I never got to share them. 😩 So here’s one. I actually like the fact that it’s in front of our house. #piecesofsomeday
⠀⠀⠀⠀⠀⠀⠀⠀⠀
And I also wanted to add that we finally did another blog post after quite some time. Maybe we’re the world’s worst bloggers. 🤷🏽‍♀️🤷🏽‍♂️ But if you’re interested, we’re sharing a recap of quarter 3 and quarter 4 from our mortgage payoff journey. We’re also sharing what our mortgage payoff goal is for 2021. We’re a bit excited about it! You can check it out at the link in our bio.
2020. This has been a year that I’m sure none of 2020. This has been a year that I’m sure none of us will ever forget. While this year has been ok for us for the most part, there are many people that it’s been a really really tough year for. Whether it’s been financially, emotionally, health wise, etc. etc. etc. So here’s to hoping that next year will be much much better, for everyone, but especially for those who had a tough time this year. ✨♥️
We started 2020 off with owning 43% of our house a We started 2020 off with owning 43% of our house and we now own 69% of it. We had paid off 39% of the mortgage loan and we’re finishing the year out at having 66% of it paid off. (These 2 numbers are not the same for us because of our 5% down payment as well as when we refinanced to a 15-year mortgage.) It’s been really exciting to see these numbers increase this year.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
(Annnnnd this concludes our December numbers. I can’t believe I managed to share them all before the end of the year!! 😂)
Q4 was our best quarter by far, mostly due to the Q4 was our best quarter by far, mostly due to the RSUs that we were able to use. However, even if we hadn’t been able to use them, Q4 would have still wrapped up nicely thanks to us still being able to stick to our 70/30 plan.
For December we were able to color in 4 rectangles For December we were able to color in 4 rectangles. This puts our mortgage balance for the end of 2020 at $54,507.37.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
• 132 rectangles total
• 88 rectangles colored in
• 44 rectangles to go!!
The total of our mortgage principal payments for D The total of our mortgage principal payments for December was $3514.74.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
$995.13 came from our regular payment and $2519.61 came from our budget.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This put us at meeting our second stretch goal of putting a total of $45,000 towards our mortgage principal for the year! Yes, we did a little magic with our budget in order to get it at exactly $45k, but I’m sure that’s what we all do in when we’re trying to hit a certain number!! Haha.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We’re soooo happy that we were able to meet this goal because we really weren’t sure if it was going to be possible or not!
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