Monday I was at my desk paying bills and going through the budget. I was not in a great mood. I don’t find writing checks that much fun. I was also checking account balances including the 529 plans set up for my kids.
In case you don’t know about a 529
529s are qualified tuition plans, sponsored by states. There are two types, prepaid tuition plans and education savings plans. All 50 states offer plans. Many states offer tax breaks for people investing in a 529. Sometimes states even will match part of a contribution made by a resident within that state. Please check out this information from the Securities and Exchange Commission of the US government explaining what 529 plans are and how they work.
Reviewing the account balances
Despite putting money aside into a 529, I freely admit that there’s a long way to go in saving for my children’s education. In this case though, I happily wrote a check to save more in the plan.
My daughter walked by and asked me what I was doing
I have a freshman in high school who is a talented writer. I am so fortunate to read her creative work, and I am always impressed by the maturity and depth of her writing, but writing comedy is where she really shines.
Just reviewing the budget
I told her that I was checking our account balances. She leaned over my shoulder and saw her name. “What’s that?” she asked. I told her that was how much is saved for her college education.
Is that enough for school in New York?
“I will be able to school in New York City, right?” she asked. Quite honestly, I told her she better start looking for scholarships now (don’t I sound like a mother?). Instead she said, “Oh, I can take out loans...” “NO,” I said. You will try not to take out loans. Instead maybe you should focus on finding a few schools that are in state, too, where the tuition will be lower, but they’ll still be great schools. Maybe you’ll get a scholarship to a school in New York, but student loan debt is a serious issue, especially if you’re going to be a writer.”
That was a shock, and it sounded like I was destroying her dream
“But, going to school in New York is my dream!” she yelled exclaimed. “I know, but it’s really important to find a school that fits your budget. Maybe you will get scholarships, too, but we will need to keep the cost in mind.” I said.
She was pretty upset and went upstairs to her room. When she emerged a couple of hours later, she said she was exhausted -- she had been working on her writing so she can get a scholarship. I was pretty proud!
Saving for college is important, and maybe so is starting the conversation about saving and how much it really costs. Give me a call and we can start planning! As part of financial planning we can build college into the goals.
I would love to hear other people’s experiences with talking to their kids about paying for college. Please, let me know what has or hasn’t worked for starting the conversation.