Parents have many desires. One of the top desires in our family has been helping our children with college funding. My parents, as I said in Millionaire Mind handled their money well. They saved for each of us and helped with a majority of our college funding. Thanks Mom & Dad. Every family is different and approach a college education in different ways.

Banner College Savings

Some may be able to pay for the whole thing (I don’t recommend that) others can only afford to help and some won’t be in a position to help at all. As parents, we want to help and make their lives easier than we had it. Sometimes that robs them of some of the learning and growing we experienced in our upbringing.

Be acutely aware of the difference between helping and enabling. Helping an adult child by allowing them to live with you for a few months during a transition helps them move on and grow. Helping them to remain in your home indefinitely without a plan for change is enabling them to live comfortably and thus enabling them to sit stagnant, unemployed, and not growing. I’m sure there are better examples. The bottom line is, enabling allows someone stay in a pattern of negative behavior where helping gives an added boost when needed to help some one change. College funding with our kids should be a help. Helping them to achieve their degree and career. Not enabling them to become lifetime students by failing and repeating courses or wandering around courses of interest with no destination.

The Baby Steps

We entered Dave Ramsey’s Baby Step 4: Invest 15% for Retirement and Baby Step 5: Saving for College at the same time. Gleaning from the paragraphs above, sometimes saving for college cannot be done. Saving for retirement must come before college funding for our kids. BUT… we want to help them… How much are you really helping them if you end up living in their basement when you retire? What kind of feeling do adult kids have when their parents are living in distress? Or working forever with no vision of retirement in their minds. Work the steps in order.

Some people will find that they can work 4, 5, and Baby Step 6: Pay off your house at the same time. We’re not that family today so paying off the house must wait for now. To do these three steps together you must first put 15% in retirement then figure out what is required or desired for college. Then budget that out over the life of the child/children. Finally take the leftovers and direct it to paying off that mortgage. Oh yeah, and it’d be great to start thinking about college funding before you have kids or when they’re toddlers–we missed that for three of ours.

I took our oldest child to Financial Peace University when he was 16. I would suggest bringing them as young as 13 or 14. We need to demonstrate and teach our children how evil debt is as early as possible because there is a terrible opinion out there that debt is normal. It might be common, but it is definitely not normal it is evil and it turns people into slaves.

The rich rules over the poor,
And the borrower becomes the lender’s slave.
Proverbs 22:7 NASB

Consider the Cost

Consider next the cost of attending college. You don’t have to get a degree from a “pedigree”. I’ve never heard anyone even ask where I went to college. Sure that would mean more if I went to some big name college but the point is, they ask about attending college not where. When it gets down to making money, starting a business, or getting a job its more about integrity not pedigree. Don’t go out and pay obscene amounts for a big name college. Its not worth it. Here are a few other ways teens like to magnify the costs of college: 1) going to a private college 2) going to college out of state 3) living outside of the home. Going to a college in another state can multiply tuition costs by 2x to 5x or more. The same happens when attending a private college. I went to college and lived outside the home but the way things look right now and to stay out of debt and help with the college funding I think all our children will start their first few years at the local community college and live at home.

Grants and Scholarships

One more way to pay for college is to use grants and scholarships. NOT SCHOOL LOANS!!! DON’T GO INTO DEBT TO GO TO COLLEGE! Did you know that a majority of grants and scholarships go unclaimed each year. We all enjoy hearing about the “full ride” scholarships but it doesn’t take too many $100, $500, and $1,000 small grants and scholarships to help or even cover all the costs of attending school. Any kid who puts their nose to the grindstone and applies for any and every opportunity is guaranteed to get something. Just like goalmentum (Post: The Willpower Bank Account and Goalmentum), once they win one, no matter the size, they’ll start winning/earning more and more.

Save Early and Invest over Time

Make a plan, count the cost, and decide to save now. Now that you’ve decided to save, you need to be aware of some of the savings plans that weren’t around when my parents were saving for me. These plans serve us well because they protect their growth through tax advantage. Any growth on the money in the account is not taxed and depending on your state, you may be able to claim a tax deduction on the money you put in. The two plans I recommend you research are 1) 529 Plan, 2) Coverdell ESA (Educational Savings Account). Get an investment professional when you set these up because the rules change frequently and are often different from state to state and the best plan in those rules may vary depending on your income.
This brings me back to the old saying, “The best time to plant a tree was 20 years ago, and the second best is now!” As soon as you finish or cover Baby Step 4 it’s time to start putting this money away and letting the compound interest do it’s job of growing you child(ren)’s college funding. Here’s one last Dave Ramsey resource to click on and check out.
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