Did you know that the average room and board for a state university is $50,000 a year? This translates to $200,000 for a college degree – for one child! Do you want your children to attend college? How do you plan to pay for it?
One of the biggest mistakes parents make is not managing their money responsibly, living above their means, living in credit card debt and not planning for the future – especially college. One parent I met recently who said she did not have a college fund set up for her children said, “My daughter is very bright. I’m sure she will get scholarships so we won’t have to pay for her college tuition.”
First, her daughter is only 5 years old – how in the world can she asses at this young age how her daughter will do academically? Second, it is not fair to put the pressure or burden on your children to pay for school. It is your responsibility as a parent to pay for school.
A child should have the opportunity to attend college regardless of scholarships. For parents who say, “I can’t afford a college fund” – well, my college fund each month costs me less than my cable bill! So, if you can afford cable, you can afford to have a college fund for your children!
David Bach, author of The Automatic Millionaire, writes in his best-selling book about what he has termed The Latte Factor.
Bach says, “The Latte Factor is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, bottled water, fast food, cigarettes, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.”
Recently I sat down with my financial planner to reassess my college fund now that I have two children. Over the past five years, we have paid $114 a month for my daughter’s college fund. Now that we have a second child, we have increased our monthly contribution to $200 a month – and we will increase this amount 5% every year.
You might be thinking, “$200? I can’t afford $200 every month!.” Well, how much do you spend on cable TV each month (my cable bill hovers around $185 each month)? How much do you spend eating out in restaurants each month? How much do you spend at the hairdresser, on text messaging, Starbucks, shopping or on alcohol and cigarettes? If you are like most parents, you are probably spending far more on needless, invaluable things each month than you are on your children’s future education.
It’s not a matter what most families can afford, it’s what they choose to afford – and setting their priorities straight.