Saving $250,000 for my son’s college education
In “My kid’s college costs will be $467,000! Are you kidding me?,” I may have gone too far toward the worst case scenario. After additional research at Savingforcollege.com, a more realistic number should be around $250,000 for 2024. Although I have not decided on the exact investment vehicle, I am leaning toward the New York’s 529 College Savings Plan.
In the mean time, I wanted to have a rough plan in place. Similar to my $1 million plan, I am going to save $5,000 per year starting this year (2007). If I invest that money in a tax deferred or tax free investment vehicle that grows 10% per year on average, I should have $250,000 by 2024 (updated 1/1/2008):
In the future, I will come back to this plan and adjust it if needed.
Updated, Oct 12, 2007: We started a New York’s 529 College Savings Plan for our son.
This article was featured in the 3rd Carnival of College and Finance hosted by College and Finance.
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tax deferred, college savings plan, worst case scenario, 529 college savings, Goal Setting, tax free investment, Investing, college, 529 Plan, successRecommended articles
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Great plan! I envy your organization!!
Where do you reliably get a 10% return on investment every year? I think you are gambling the numbers. So basically you’re gambling with your kids education.
@Fubek – that’s a good question. I hope the post, “Introduction to CAGR” will answer your question. If not, we can discuss this further. Thank you for your comment.
Yea, my mother bought 2 529s for my 2 kids last year in MT, and they’ve really done nothing exciting, but one of my goals is to look into the options this year on what I can do to further them – have you heard if you can transfer 529s between state programs?
@hank – I think that having the plan under your mother’s name might be an even better way to do it, because the savings is not considered in financial aid calculation at all.
If your plan is not that great, you may transfer it to another 529 plan; however, you have to read the fine print because some plans impose a penalty when you do so.
Is the 529 the best plan for our newborn if we are not sure she will attend an in-state college? We live in Indiana but may to a different state. Thanks.
@Wendy – You will have to read each plan carefully. Some plans are very flexible and allow you to use the fund anywhere — i.e., with NY plan, I am not limited to NYS schools.
Thats a lot of money for their education. How many kids do you have?
I think its real nice that you are going to pay for your kids college(I have to pay for my own). Just make sure you teach them through other methods the value of a dollar. I have a lot of friends who don’t take their parents money seriously and waste their time at college. Make sure they are great full for this huge gift you are giving them. They are not owed it.
@David — that’s an estimate for 1 child going to 4 years public college 17 years from now. It’s mind blowing. I am definitely going to teach my kid(s) to be responsible with money. I am like your friends — I didn’t appreciate what my parents gave me when I was going to school. I spent a lot of money and didn’t pay enough attention in class.
Yowza- you’re saving over $600 per month just on your kid’s college? Either you make a TON of cash to be able to sock that away, or you’re damn good with money. Either way, great job on exceeding your goal last year.
@Llama Money — I am not sure how you got to $600, but I contribute $425 a month to his 529 plan. I don’t make a lot of money, but I take savings very seriously.
$7375 / 12 months = $614.58.
Oh, that. A lot of it was gift from joyous and generous grandparents.