How to Save $100,000 for Your Child’s College Education
In the past, a majority of the articles here on Money for College Project have been focused on helping you save money at college, maximize your financial aid and win scholarships or grants. These are all admirable goals, but with my recent change in focus, I want to introduce another side to this equation.
This week my wife and I sent in a check to retain our adoption attorney, and we submitted our homestudy application. All adoptions, whether they are domestic or international, must have an approved homestudy on file. A case worker will actually come into our home for the interview process and speak with my wife and I together and separately. They will then take a tour of our home, and ask a lot more questions.
Needless to say, it is now real. We have really started the adoption process!
That is very scary and incredibly exciting all at the same time.
Unfortunately, the adoption process is very expensive. For those of you who do not know, if you go through an agency a domestic adoption could cost up to $30,000. If you simply use a lawyer, then your costs could range from $12,000 – $30,000. If you decide to adopt a child out of foster care and through the Department of Social Services, you can generally complete the adoption process for little to no cost. We chose to go with an attorney (not an agency), but we are still facing some very large bills in the near future. I plan to post much more about the adoption process very soon for anyone who is interested. I promise!
Saving for College? Seriously!?!?!
For many adoptive parents, the financial hurdles of bringing a baby home are prohibitive. The average American family does not have $25,000 saved for retirement, let alone $25,000 set aside to compete an adoption! Adoptions are also generally completed by couples who are 35 and under, which also tends to coincide with much lower income and assets. This seems to be a perfect storm of financial hurdles.
Thankfully, my wife and I have been able to diligently sock away money every month for the past 2 years in preparation for our adoption. Now that we are here at the end (beginning) it is encouraging to look back and see how far we have come. Saving for a specific goal can be incredibly rewarding when you are able to watch it actually unfold before your eyes. Writing checks out of our adoption account is exciting, because we have worked so hard to set aside this money, and we are both very excited about bringing our baby home.
As we are moving through the adoption process however, I cannot help think about all of the other expenses that we will have for our child once we bring them home. Obviously it costs money to raise a child, and then there is the issue of saving for a college education.
This brings me back to the main point of this article; I’ve talked a lot about how to win money and save money on college costs, but I have not talked a lot about how to earn more and save more money to help pay for your college education (or for your childrens’).
Saving for college is generally something that is placed on the backburner until the child hits high school, and college costs become real. Unfortunately, just as with retirement, it is too late to start saving when the expense is upon you. Saving for college can be started when your child is born, or even before if you would like.
In future segments here on Money for College Project, I want to show you exactly how I plan to earn more money to put towards my child’s college education. I also want to show you how you also can save upwards of $100,000 towards your child’s college education (in addition to saving for your own retirement).
I believe Dave Ramsey’s baby steps go something like this:
- Baby Step 1 – $1,000 to start an Emergency Fund
- Baby Step 2 – Pay off all debt using the Debt Snowball
- Baby Step 3 – 3 to 6 months of expenses in savings
- Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
- Baby Step 5 – College funding for children
- Baby Step 6 – Pay off home early
- Baby Step 7 – Build wealth and give!
My wife and I loosely follow Dave Ramsey’s guidelines here, but the main point is that you need to have solid financial footing before you begin saving for your child’s college education. It doesn’t make any sense to start putting away money for their college education if you are still paying on high interest credit cards!
Much more to come!!
Have you started saving for your child’s college education?