I [29M] am single with no kids, but I know I really want to have some one day. Would it be smart to start saving for their college education now, even though they don’t exist, or is it considered stupid and futile to do something like this and force myself to budget aggressively when there’s no real need to?
I saw in my sleep that I got a new job and a raise and I decided that I should save 4% for that future college fund.
Is this thinking way too far ahead?
Depends. If you make good $ and you’re already maxing out 401ks and saving a few thousand a month into a taxable brokerage account then you could open a 529 with you as the beneficiary and switch it to the kid once born/adopted.
How many kids do you want to have and how much do you want to save per child?
Remember, you can always borrow money for your kids’ college, but you can’t borrow money for your own retirement. I would recommend focusing on your own retirement first and make sure that’s established
I think you are getting ahead of yourself if you are thinking about a specific college savings fund, but that doesn’t need to stop you from saving in general. Make sure your retirement savings are on track (by 30 you want to have about 1X your annual income saved for retirement, then another 1X each 5 more years). Any savings in addition to that can be in a regular taxable brokerage account.
If you want, you can open a 529 now with yourself as the beneficiary and then change the beneficiary to your kid when you have one someday.
You could also save in a taxable brokerage, which would give you more flexibility in case you do not end up having education expenses.
Or you could just save extra now for your retirement, and then when you do have kids and need to save for college, you can cut down on your retirement savings a little to put more toward college.
It’s not like when you have a kid, they immediately need college. You will have about 18 years to save up after the kid is born.
Three is no reason to start saving for hypothetical future kids colleges today – there are good reasons to be saving for your hypothetical future today which may include kids, retirement, life experiences etc.
So do save your raise, be smart with spending and avoid lifestyle creep – whether that is for future college costs or not.
Be smart and lower the upfront cost of college. Max out on transferrable credits in high school, do basic classes at tech school/community college and transfer credits to university for junior year and beyond.
I’m trying to convince my wife that my 4 year old can eventually get his GED at 16, get a job, spend a few years working and decide whether college makes sense.
Then, he can contribute financially, knowing what it costs to attend. I’ve watched 3 brothers fritter away their college years, including attending expensive private universities, changing into useless majors, financing a student lifestyle only to regret it later, against my advice.
2/3 went on to apprenticeship programs that earned them AS degrees after they couldn’t find jobs in their field (criminal justice, history education). The other has worked in corrections for 20 years because he didn’t finish college and a degree wasn’t required. He’s doing better by the way, now that he’s got counseling for the job related PTSD.
Are you set with a house, a vehicle, a retirement, emergency and a vacation/fun find for yourself?
That’s fully funded IRA, fully funded 401k (not just the match), not house poor on a mortgage (or substantial down payment ready to go).
If you’ve taken care of everything in your life and all your tax advantages, sure. But why not just put that money in a taxable brokerage on the side. If it gets used for a college fund, you have it. If not, you still have it, but it’s not allocated to education before you have a kid.
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