In today’s episode, Andy chats with Damian Dunn about how to save for our children’s future.
Damian is the director of personal finance strategies at Your Money Line and is the co-host of the Pete the Planner Show. He’s been working in the financial industry for nearly 20 years and is passionate about providing accessible and affordable financial guidance to anyone seeking it. He also has two kids of his own, and lives in Indiana.
One sign of hope coming out of the huge student loan crisis lately is that parents are starting to save more for future college expenses. According to Fidelity in 2016, families saving for college has increased from 58% to 72% over the past 10 years. With the cost of college increasing steadily, the more savings we have, the better prepared we’ll all be as parents.
The cost of college is completely out of control. Every year, the cost to attend a 4-year university increases by twice the inflation rate. To put it in some more personal terms, by the time my 5-year old little girl goes to undergrad, we’ll need around $200,000 to make a 4-year in-state university a reality. Did I mention I have two kids?!
The other major crisis affecting our country right now is the massive amount of student loan debt we all have. According to Time in 2016, more than two-thirds of college grads graduated with debt, and their average debt at graduation was about $35,000. According to that article, this number will be tripling in the next two decades.
When my daughter Zoey was born we met with a financial advisor to discuss her future college needs. He advised us that for Zoey to attend an in-state college like Michigan State University, we’d be looking at a price tag of about $200,000. 4 years of college would cost us $200,000!
Since then, we’ve been diligently saving in our state sponsored 529 plan through low-cost index funds. But honestly we don’t feel like there is any way we’re going to be able to save that much money by the time she’s 18. And quite frankly, Nicole and I want to make sure we’re set for our retirement before Zoey and Calvin get a free ride to college. Sorry kids!