Show Me the Money –Keys to Saving for A Child’s Education

Saving Issues An advanced education is important An expensive investment How much is enough? Tax breaks Titling educational savings Family members/friends chipping in Competing expenses You have some advantages

Tough Choices for Savings

Your retirement

Your child’s advanced education

Tough choices…

Save and invest for your retirement before funding an advanced education

Why? There are many sources of loans for your or your child to borrow from for an education. No one will loan you money for retirement.

Goal – Do both

Three of the best reasons for going into debt:

House Business Quality education

A necessary education

Ability to earn a living and income go hand in hand

Critical that your child complete high school! Few unskilled jobs today What used to take a high school education

now takes a college degree. What used to take a four year degree now takes a masters.

In order to earn a living

College– Two year– Four year– Professional– Graduate

Proprietary school– DeVry

Military Trade school Others

How much savings is enough?

A $100,000 question! Higher education costs are rising much

faster than the rate of inflation Public v. private college? (public

college grads do just as well) “Mom, I’ve decided to go to law school” “Dad, I think I’d like to be a surgeon”

Discuss your values…

I know many of your friend’s parents provide their teen with a car, however our higher priority is to help with your education…

I’ll fund half of a public college, in-state education – the rest is up to you…

Get an education to earn a living – not just learning for learning’s sake

Discuss your values…

I’ll fund only 4 years of undergraduate education. I’m not interested in funding a 5th year senior.

Your #1 occupation is to be a student and to earn the best grades possible. The money you can get through scholarships and grants will be much greater than what you could save from a part-time job.

Saving? Where do I start?

Pay yourself first Develop the habit You have the advantage of time

– Saving early is better than later– Saving late is better than nothing

Finding the money to save

Decide right now if want to do more than give just lip service to saving

Pocket change $2 day Sign up for only “Plain Jane” cable Drive a car an extra year or two Mow your own lawn Control spending and debt (credit card type

spending)

How to Fail –

You fail when you sacrifice what you want most

for what you want now

As you think about where to save education dollars… Save it my name or my child’s Are there tax advantages? Risk/return

Why does it matter who’s name is on the account? The person that owns it, controls it

– Might buy a new red sports car instead of an education

How is it considered for financial aid?– All student’s assets available for education– Only 5 percent of parent’s assets

Options

Missouri Savings for Tuition Program (MO$T)

Education IRA Series EE Savings Bonds Mutual Funds Prepaid Tuition Uniform Gift to Minor’s Act

Pay the whole bill or just a part?

Student work a reasonable amount (not too much)– Part-time work– Work study

Grants and scholarships (don’t have to repay)

Student loans

Are there others to contribute?

Grandparents Doting aunt

Time is on your side

Start when your children are very young It is time, not timing, in investments that

pays off Start early rather than late Control consumer spending and

consumer debt