Why You Should Save for Your Kids’ College Education


One of the financial concerns of every couple is saving for their kid’s college education. Some end up making excuses why they shouldn’t, among them:

  • You cannot borrow for retirement, but you can borrow for college.
  • It promotes responsibility– they’ll work harder academically.
  • I don’t have much money left after expenses.

Should parents save for college? You’re going to hear a strong opinion from me.

Top excuses parents make

“You cannot borrow for retirement, but you can borrow for college.”

You should indeed prioritize your retirement; the kids can always borrow. But do you really want your kids to get into debt?? I don’t and I’ll do my darn best to help them pay for their education. Don’t be selfish.

Assuming that you’re debt-free (besides the house), you should contribute the bulk of your savings into your retirement account AND still make an effort to save some for college. I’m not saying that you should be responsible for 100% of the costs but at least make some effort.

Times are different, the cost of education is getting higher than ever. Your kids will need as much help from you as possible. You brought them into this world, so you bear some responsibility in making sure that they have a bright future.

“It promotes responsibility– they’ll work harder academically.”

Children learn from their parents. They are an extension of their parents by their words, thoughts, and actions. How then can not saving for college promote responsibility??

It might have the opposite effect— it can promote your irresponsibility.

Would they work harder academically if they’re paying for it themselves? Probably yes. Does this mean that they’ll perform better than when you’re paying for it? No.

By saving for college, you instill in them the responsibility to do the same for your grandchildren and the generations to come.

“I don’t have much money left after expenses.”

Not surprisingly, the people who make these excuses are the same people who overspend on things like cars, vacations, and mindless home renovations.

In most cases, all you need to do is to tighten your budget. There are countless ways you can save extra money:

driving a cheaper car, changing your own oil,  shopping for cheaper insurance, avoiding junk food, brown-bagging your lunch, getting rid of the cable, buying food in bulk, taking advantage of coupons, avoiding overdraft fees, not paying ATM fees, not buying extended warranties, buying refurbish electronics, skipping the latest model, mowing your own lawn… whew!

Either that or get a second job.

You should and you should start before they’re born!

The problem is that parents start saving two or three years before their children go to college when the time is not on their side.

Just like your retirement savings, the earlier you start, the more time your investment will grow. This is especially true if the funds are invested in stocks.

In our case, we started a 529 account for each of our kids as soon my wife told me that she’s pregnant. As a result, we now have over $200,000 saved for our two children.

The results speak for themselves.

Maddie’s 529 (5 years away from college)

Marco’s 529 (8 years away from college)

Popping over from Think Save Retire!

Great insight. I am dating someone with 2 teens, 13 and 16. Currently there is no money saved for their educations. The 16 year old has great grades and will most likely get some scholarships but that isnt a guarantee. It is mind boggling to me that college seems to have just snuck up on them…then again, it is easy for me to judge when I don't walk in their shoes. I try my best not to interject with the reality of the situation but sometimes it squeaks out. Student loans are the answer to how the are planning to solve the problem…I can't tell you how much that makes me shrivel up inside!! Oh vey. Good for you guys for getting your shit together from the start! That is the responsibility of bringing life into this world. Though I didn't go to college and am not a huge fan of our academic system, that is not for me to decide for my kids. To give them every opportunity (within reason) possible and foresee those needs in the future is what parenting is all about. Compound interest is a huge game changer when you're looking at a 18 year spread…unfortunately not so much with a 2 year spread.

Saving for college was our number 1 priority for both of our kids. We are pleased that we have the funds to pay 100% of their education and they will graduate with zero debt. Part of their fund's success was that I put ALL of their money into the S and P 500 in 2009. Maybe a little risky but, history showed the market would bounce back. It did and one account shows over 50% in growth and the other one over 70%. The lessor fund was for my daughter and we switched her to cash when she was in 10th grade to protect her amount. My son is still 50% equities and therefore, larger balance. Thanks for posting…

What they can probably do when the time comes is to minimize debt (e.g. attending a 2-year community college first before transferring to an in-state university). Perhaps the 16yo can also find work to help save for college expenses. Of course, any money saved cannot be invested in the stock market with that short of a timeframe. But this still helps compensate for the lost time. The hard part is communicating this to him without sounding too intrusive (depends on the stage of the relationship). It would be interesting to know how he would react. That's one way to know if a guy is 'marriage material'.


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