I don’t have a trust fund and we’ve been planning for it all along.
You have to seek a balance. Too early and you don’t have the money to support them. That doesn’t mean you CAN’T support them, just that it’ll be tough.
Some people wait so long that it just never comes. Financial planning is one thing, obsessing about money so much that you care more about your money than your family is another, and the threshold between the two is miniscule.
There are other considerations besides fertility that become a factor as you get older. The quality of your back for instance. Can you wrestle on the lawn with your son at 55 and he’s 12? Do you have the energy to keep up with a toddler at 45? Either way you are choosing one form of providing for the other, striking a balance is the art of it.
Then financially if you have kids when you are older you need to consider, “Am I going to be putting my kids through college right before retirement?”, this is the problem confronting my Aunt and Uncle In-Law who adopted two little girls from China in their 40s. So it can screw you financially to have kids too late as well.
If you love and care about your kids you’ll bust your ass to take care of them. My daughter wears tons of hand-me-downs, the rejection of hand-me-downs quite frankly disgusts me, especially when people who reject hand-me-downs condescend like they care about the environment in other ways. God forbid they REUSE things. With all the hand-me-downs we’ve gotten we’ve hardly had to spend any money on clothes for our daughter, it’s great. Also, if you are fairly social there are a lot of resources out there for young parents. We are on a couple of kids mailing lists in our neighborhood and go out to play groups occasionally.
Diapers, Day-Care and Doctors are certainly expensive, but a lot of people are neurotic about the financial planning aspect of it. If you wait until you can ‘afford it’ to live your life, it’ll pass you by. But then again I’ve been laughing at all the people who say you need to make more than 100k per year per individual to live in Manhattan for over a decade.
Not following you on this at all. You don’t need a trust fund to finance an education at all—your statement makes no sense.
Here in Washington State we have a program similar to a 529 program (but better in my view). It is called the GET program. Guaranteed Education Tuition. So basically you purchase 100 credits (which is one year tuition at the UofW) at today’s dollars and when your kid goes to school you cash them in. So if say it costs $6000 a year for tuition today and when your kid goes to school 20 years from now tuition is $12,000. Your kid uses the 100 credits to pay for their school. You aren’t paying $12,000 a year, you are paying $6,000–thus the guarantee. It appears to be a good hedge against inflation AND it is not stock market dependent like a 529 program. You can purchase 1 credit at a time, anyone can buy them for your kid as a present, etc. So even young families can afford to purchase a few credits a year, so your statement about planning makes no sense.
I just purchased half a year education for my daughter yesterday–one year left! And I have 5 years in which to purchase that final year–but my goal is to pay for it next year so that I can have her tuition paid for then start saving for other expenses.
Would you mind sharing (1) the birth years of your children; (2) your family income in the years preceding those births; (3) your family income since then; (4) the amount of money you have been saving; and (5) how that money has been invested?
ETA: The same question goes for the other folks who made similar claims.
I don’t understand your 3d point. But more importantly, while I acknowledge the prospect of saving for college can appear daunting to new parents, the basic line is you start saving SOMETHING on a regular basis. Hell, the concept of saving enough to retire can also appear danting - but it becomes even moreso if you don’t start doing anything about it until your 40s.
Many young folk seem not to be willing to forego immediate pleasure for longterm security, and seem not to understand compound interest.
Just this morning I was discussing college prices with a friend on the train. It really is hard to believe that college prices can keep increasing in the manner they have. Really hard to imagine what that would mean for the future. Will college education will become a privilege of the rich? Will declining enrollments force some colleges to close? Will we see a rise of different educational models?
And - of course - there are ways to make the cost of college more manageable through AP testing, scholarships and other aid, junior college, and state schools.
(Next year - the only year all 3 of my kids will be in school at the same time - I think my wife and I will be paying colleges somewhere over $60k!) :eek:
College is expensive: Yes and no. It costs a little over six grand a year to live at home and go to a Minnesota State College. A lot of states have affordable state college options. Its cheaper if you spend the first two years at a community college. Not everyone needs to send their kids to expensive private schools. If you can go to a state college for six grand, you’d need $24k to finish college - that’s only putting
College has been increasing faster than inflation: That’s why we started investing young, investing often. It gets more expensive seems to be a bigger argument for planning for it.
Saving for it lowers financial aid: (At least I think that is what you are saying). Very true. But most financial aid for middle class families comes now in the form of loans. I’m not seeing that the opportunity for my kids to go into debt for college should induce me to save less for them now. At least starting to save now gets them compound interest.
Now, if I had my kids young and was struggling to keep them in tennis shoes, college savings would be a low priority. But because we can afford it, my kids should graduate from college with no student loan debt. Starting your working life with no student loan debt in my experience really makes a difference between young adults who get a quick start on financial stability (being able to put money into a 401k, putting a down payment on a home) and those that are struggling to keep up with bills.
Why? I don’t have a trust fund. When my kids got done with daycare, I moved the money we had been spending on daycare (in excess of $1k a month) into college funding. Additional funding has come from the sale of some stock (grants and options) through work. They are 9 and 10 years old. How much money we make is irrelevant, what is relevant is that we plan for it and live below our means to afford it.
If the plan is to send the kids to State U, then I agree it’s totally doable for typical middle class people. When I talk about saving for college, I envision having enough money to send the kids to places like Yale if they get in. I suppose I should have made that clearer.
Well, yes. If middle class people want to afford Porches, that’s going to be unrealistic, too without some sort of additional resources or huge other sacrifices. Fortunately, Honda makes some very nice functional cars.
Average age of first child in the U.S. is 25.1
Why would this be an issue for most people? The number of people whose children will go to Yale is vanishingly small. Why plan for something so unlikely?
And even if they do get into Yale, they can still get scholarships, loads and part time jobs.
What does having a trust fund have anything to do with it?
I realize I have a bit more knowledge of accounting and finance stuff than most, but you don’t need an MBA to plan a budget. You know how much you make. You should have an idea of how much your major expenses are. You can go online to find inflation rates and figure out some sort of realistic average.
I wonder how many people actually use a tool like Quicken or Microsoft Money? I typically make all my purchases with credit cards (but pay the balance each month) specifically so I can track where I’m spending my money. I don’t like see a bunch of ATM withdrawels on my bank statement where I have no idea what I spent the money on.
I think people need to evaluate what there education and career goals are before they decide on a college. I generally favor going to the best (and therefore often most expensive) school you can get into. However if your kid isn’t that motivated or ambitous, why send him to Harvard for $100,000 (assuming he can even get in).
**autz **- The Ivy League aren’t the only expensive schools out there. There are many other really good universities that are also very very expensive. But as you say, there are loans, scholarships, working part time, going to school part time, taking some core classes at a less expensive school and transferring (just make sure they transfer).
One thing is for sure, problems don’t go away by not thinking about them.
I’m a little confused. Are you claiming that if a typical educated middle class person drives a Honda (instead of a Porsche), then he or she will be able to save enough money to pay for Yale for 2 or 3 children?
$1000 per month at 5% percent interest will yield $220k, possibly enough to pay private school tuition for 1 child.
If what you make is irrelevant, then I’ll make some assumptions about your income and expenses, ok?
No, I’m saying that your desires need to be in line with your income. We are not entitled to drive Porches or go to Yale.
Go for it. I’ll give you a hint. In excess of $1k means more than. We make a lot of money - I’ve said that much before. And our expenses are rather small (our house is paid for - thank you stock options).
So what? That doesn’t contradict my point about planning for college, as far as I can tell.
Again, so what?
That’s not necessary. Since, according to you, your income is irrelevant, we will assume for the sake of argument that your family pretax income is $75,000.00 and that you have a hefty mortgage payment, along with big property taxes.
If you can’t follow my point, I’m afraid I didn’t follow your point. Your point was ‘you can’t plan for college.’ My point was ‘sure you can’ You said ‘oh, well yeah, state school, well, yeah, middle class people can afford to plan for that - I meant a school like Yale.’ My response was 'yeah, middle class people can’t afford Porches either - doesn’t mean they can’t drive a Civic."
Cool, and yet I put $1k away for college…I’m really frugal - or in a lot of debt. But I don’t have a trust fund.