My biggest financial goal is not to retire with a healthy savings account and a stable 401(k). I’m not worried about getting a six-figure salary or owning multiple properties. The way I measure financial success is: Can I pay for whatever college my daughter chooses to attend?
I was born in 1985, near the very beginning of Generation Y. While there are plenty of stereotypes floating around about me and my peers, I think every single Millennial will agree with one lesson ingrained in my mind: The only way to succeed in life is to graduate from college.
We are the generation of college debt. My generation is comfortable taking out loans as big as mortgages just to get a degree. We’re the boomerang kids, whose loan repayment schedules send them back to their parents’ basements when the entry-level salary just can’t keep up.
We’ve spent a lot of time stressing over college and money … and I, for one, can’t seem to stop.
Planning Ahead and Doing the Math
In a couple of weeks, my daughter will have her fifth birthday. She’ll get plenty of toys from family and friends, and she’ll get checks from a select few grandparents and great-aunts. I’m planning to put those checks straight in her college savings account. It might not be the most exciting use for the cash, but she’s still too young to miss it.
When my daughter was a year old, I started a 529 and another, smaller college savings account. I’m in an extremely fortunate situation in that I receive child support payments from my daughter’s biological father, and I don’t need those payments to help pay my monthly bills. I decided that money would be best spent preparing for future educational expenses. Thus, $400 a month automatically goes into college savings.
It sounds reasonable. If I keep it going every month until her high school graduation, we’ll have roughly $86,000 saved for college. That’s an impressive sum. Until you realize that many private schools already cost more than $40,000 a year before room and board. College costs have been growing at more than 6% a year. The College Plan Savings Network estimates that, even with modest 5% growth, a private school education for four years will run upwards of $300,000 by the time my daughter heads off to college.
I’m a freelance writer, and we would need to hold back an additional $1,300 or more each month to have that amount saved before college starts. And this is just for one child, mind you.