Even though my girls are just learning to spell their names, I know it won’t be long before they’re signing them on a stack of college applications. And the more I hear about the rising cost of tuition, the more important it seems for my husband and I to consider how we’ll finance the twins’ education now — instead of when they’re teenagers. After seeking advice from friends and a few financial experts, we decided that before we start our kids’ college funds, we’d like to have these three things in place:
One of the experts I talked to suggested saving enough to cover six months’ worth of expenses, which seemed like a lot at first. But after she explained how quickly that money would disappear with two kids in the house, it didn’t seem like an option for us to set aside any less. While we have some money saved up in case of emergencies, we’re working hard to meet that six-month mark. One of my friends suggested treating our emergency fund like a monthly bill, which has worked out great. Seeing our contributions as a fixed expense has made us less likely to put off saving until the next month.
One of my friends suggested treating our emergency fund like a monthly bill, which has worked out great. Seeing our contributions as a fixed expense has made us less likely to put off saving until the next month.
We’ve all heard tales about the dangers of too much credit card debt, and while I think we’re pretty good about keeping our spending in check, those finance charges can add up fast. That’s why we’re making a better effort to track our household spending by monitoring online account statements and marking our expenses on a spreadsheet each week. We’ve even set up budgets for groceries, dining out and family fun nights through Mint.com. Having a clear budget to stick to has inspired us to look for creative, low-cost ways to entertain ourselves and our girls. Luckily, our little ones are at an age where the public library is still an acceptable place to spend a Saturday!
While college tuition is costly, there are a number of resources for students beyond their parents’ bank accounts. Though we may have to do some searching, I know there will be grants, scholarships and other funds available to supplement our savings when the time comes. But where retirement is concerned, our spending money ends with what we’ve saved. So rather than diverting our retirement savings to our daughters’ college funds, we’re sticking with the contributions we currently have set and are looking for other ways to find some extra money.
Once we have these few goals under control, we’ll be able to plan exactly how we want to build a strong financial foundation for our daughters’ college education. We’re almost there, but for now we’ll just have to focus on reading, writing and arithmetic.