We are done paying for Med. School, which we could afford after D.attended UG on full tuition Merit.
Our “college” saving was zero. It made more sense to us to put ALL left over $$$ into 401k’s. It workded out very well so far. We are into next financial “adventure” - will be looking for retirement retreat, while not ready to retire yet though. I have mentioned that before, this is an updated version, since we are actually DONE, will support the kid for few months to cover her living expenses, then, hopefully, she is on her own. She is in great minority who is graduating from Med. School without debt. It was a family effort, D’s hard work and making wise choices and our ability to hang on to our employment and save in 401K’s
Before our D., we have also paid for our S’s college out of our paychecks. It was much cheaper in his time and he thanked us so much for his loan free life.
A more interesting insight would be: Is saving through 529 better than regular saving?
This may make me unpopular, but here goes: we started saving for our D (an only child) when she was born. By the time she graduated from high school, we had more than enough saved for college (she had a merit scholarship that helped defray the cost of college, which did free up some of the money we had slated for school). We also cash-flowed part of the expenses and left some of her earmarked funds alone.
We have still not spent that leftover money - we’re saving it for her wedding or for a kitchen remodel, either of which could be looming in the next year or two.
To the OP, the first question you have to ask yourself is WHAT are saving for? “College” is a very broad term, and the answer to that question will be the basis for whatever plan you put in place.
Our goal was to save enough to cover three years of tuition at our state flagship and pay four years of room and board out of current income. The fourth year tuition would be a loan if necessary. In retrospect, having a little more would have given us a little more flexibility for things like study abroad, etc. If “saving for college”, for you, means full pay for (future) kids to any private in the country then you should have started saving when you were in college! (And, yes, I know privates often give great aid, but one of the key things is your saving plan should be to assume no aid and that you’re paying.)
There’s plenty stories out there of households where both parents get a meager public service salary and they’re able to completely fund their kids’ education with no debt, so it can be done. It’s just that a lot of families either don’t think about it early enough, or aren’t willing to pare back their lifestyle. Great job getting the jump on it now! Kudos.
I am in a similar situation as old oldfort. When my kids were born, the rules on 529 and pre-paid education were not as clear as they are now. So we elected to consciously not save for education, electing instead to put all the savings in to retirement accounts. To be honest, I can’t say I would do it any differently today. Retirement does not count as savings for the FAFSA, and I can access the money if it is truly needed. Other than that, I am just living frugally while the kids are in school.
We opened a 529 plan and contributed to it for a number of years, but it was really just supplemental and we mostly are paying for college out of current income. However, we have other forms of savings and investments that could be used. Looking back, I think the best thing we did was keeping our housing costs relatively low in relation to our income, so we had money to spend on other things, including college and retirement. That’s not really structured “saving” but it’s a defensive attitude toward spending that has served us well.
We started saving for each kid as soon as they were born, and managed to sock away enough (and got lucky) to be able to pay full tuition plus room and board wherever they may want to go, including privates. DS is going to a private school but got good merit so that he will have a good chunk left over after he graduates. He now has a nice head start on retirement savings and will have no debt. Time is your friend when it comes to savings!
Am I the only one here who had used up all the money in our 529 when my child was in his junior year in college? The size of our 529 was too small (for a private college.)
BTW, I noticed the other day that, unlike today, when I was younger and working, a more limited amount of money could be put into 401K each year.
We started when the (2) kids were born. Started immediately buying U.S. Savings Bonds for each kid every month. There were some other savings too but the Savings Bonds were a big chunk. We saved enough for them to go to any instate public university debt free. Luckily, they both wanted to attend those schools. Both graduated with Savings Bonds left over (the bonds were in their names). So we gifted that to them after graduation.
We didn’t start until the kids were in elementary school, I think, although my wife says I put aside some of our wedding gifts for college tuition (I don’t think we segregated our funds at the time). We established 529 plans for both kids. My objective was to have about $250K per kid. Through luck and hard work, I have done well enough financially that there was no chance we would qualify for financial aid so I didn’t worry about stuffing savings into a retirement plan for FAFSA purposes. I was able to do a little bit of income shifting and thus pay some tuition after a lower tax rate. Both kids are in grad school and we haven’t exhausted the funds yet, though with the older one, we likely will. Interestingly, there is a generation skipping feature that lets you use any unused funds for other beneficiaries (like the kids of the current beneficiaries).
If we had lower income, I might have had my kids look more closely at schools with merit aid or attending school in Canada (where my daughter started) as they are dual US/Canadian citizens and school there is incredibly inexpensive (for my D, it was $15K for tuition, room and board the first year). My son went to an elite school that didn’t give merit aid, though he was offered it at some of his safeties. My D got some merit aid in Canada and in the US, but I would likely have been a lot more sensitive to getting merit aid under other circumstances. I also could have pushed my son towards a PhD program (where he would have been fully funded) instead of a masters program.
I’d repeat others’ advice, start early and be consistent about savings. There are lots of choices and tradeoffs one can make. Grandparents can contribute to their grandchildren’s 529 plans, which may help. If and when the next generation arrives, I will do that if I am able.
While it is nice to save for college, you need to remember that that is only part of your overall financial plan. Are you on track for retirement? Do you have a solid emergency fund (living expenses for at least 6 months, preferably longer)? Do you have a regular system for maintaining a life-happens fund so that there is money for that surprise break job/new fridge/root canal and crown? Get all of those things lined up first.
We weren’t able to save anything toward Happykid’s education until her senior year in high school - yes you read that correctly. Our goal was to have the fall tuition for her community college saved before it would become due. She got lucky and landed a full-tuition scholarship for the CC, so we just kept on saving until she headed off to her four year college. Those two years of free CC meant that she was able to graduate from her nice state U with only the junior and senior year college loans. Worrying about our overall family saving plan first meant that when the breadwinner’s job vanished halfway through Happykid’s junior year of college, we could get by for the 17 months it took before the breadwinner had a paycheck again.
This thread seems to be a duplicate of the “How much did/will you have saved for child by college time?” thread started by @FrothyShake in November. I posted there that we started saving before DS was born and put those savings into a 529 when he entered first grade. Since then, all of my income, less maxing out on my 401K, has been put into that fund. It will now cover the full cost of any public or private four-year college in the U.S. Ironically, he’s choosing a service academy (couldn’t have seen that coming in a million years) and will not need the 529. Our financial planner informed us that the Military Family Tax Relief Act says that attendance at a U.S. military academy will be treated as a scholarship for purposes of the 10% penalty on nonqualified withdrawals from a 529 plan or Coverdell ESA. The value of the no-cost education (as determined under the U.S. military code) can be withdrawn penalty-free from a 529 or CESA, although the earnings portion will continue to be taxable. We plan to leave the 529 intact until he graduates in case he decides to withdraw and attend a civilian school. If he makes the military his career, the government will also pay for grad school, so we may be rolling the 529 into our retirement funds a few years down the road. The best laid plans…
Yep, we are on track for retirement. In fact, I retired two years ago in my mid-40s, and DH is planning to retire at 60. when our mortgage will be paid off. Again, we started saving for that as soon as we could, socked away the maximum and took advantage of any matching funds from our employers. We were lucky to have avoided any catastrophic medical expenses, unemployment, or other financial emergencies which I know could well have changed the picture quite drastically.
We too are on track for retirement. I think taking money from retirement to pay for college is a terrible. That was my husband’s plan before he met me. Now we are both happy we somewhat “impoverished” ourselves to save for retirement and college. Only loan will be one we made one child take out because grades were terrible one semester.
I invested a couple bucks a week, but still haven’t won the lottery. So the girls are going to have to go an academy. It will be their choice amongst the four.
For me, it would not be possible to save enough money for my 2D’s college unless we do not put any money in our IRA accounts. Even my D1 got several scholarships and is attending a need met in state school, her 529 account with saving from the past 15 years would not be enough to cover the EFC for 2 years. Nevertheless, it does help to make college more affordable.
Thank you all for your answers, they are very instructive! I was the first person in my family to go to college, and so my parents did not save any money for me. I managed to get a full scholarship for undergrad and fully funded for my PhD so I was very fortunate, but I want to plan ahead a little more.
The generalized advice about living below your means and being frugal is also very helpful. All the stories of youth and savings not really being a whole lot in the beginning are also heartening. When I look at how much I’d have to save per month, I get a bit discouraged (especially if you think about saving for retirement + college + rainy day fund…ugh) but I realize now it doesn’t all have to come at once and it might be more graduated as I get older and hopefully make more money over time. Also, all the info about the 529s is useful - that was the chief way I was envisioning saving the money.
@dadof1 - I don’t know much about stocks! I tend to be a risk-averse person but I would talk to someone (an accountant? lol I don’t even know who that would be) about it.
@Madison85 - Oh, I like that idea, about suggesting to grandparents to put money into the 529 instead of buying stuff. I also agree - I love hearing about parents’ success stories saving and funding their kids!
@DesignDad - I think that’s an excellent point. Right after I posted this thread I went to look up the projected cost of college in 20-25 years from now. I think my goal would be to save enough to pay for four years of college at a public university; if kiddo(s) want to go to a private college, they would need to find a way to help defray the cost of the rest (I think 4 years at a public would probably cover 4 years’ tuition at a private, in most cases). I’ve chatted with the husband about this and he thinks the same. And yes, I am assuming no aid - aid would be a bonus.
@happymomof1 - Nope, I just started working about 6 months ago after graduating with my PhD - so those are all on the list of things to do first. Kids are quite a ways down the road yet, so this is more like idly thinking about the future. I just asked about saving for college here because that’s the given theme of the forums 
I’m currently working on the emergency fund/rainy day fund.
@juillet - Congratulations on the PhD and on the new job! If you stay sensible about how you handle your money, it will all work out.
This was our goal when my child was in the early elementary. But we considered the tuition and fees at a 4-year college only, rather than the full cost of attendance at that time.
I think you will likely be ahead of us when your child is going to college, because (I think) your kid is not even born yet.
I am not very knowledgable about the investment. One company I worked for before would help pay for a session with a financial planner. We took advantage of it but I did not think it was that useful to us.
What has been more “useful” to us in the long run is that we kept putting some money into our 401K accounts over the past 25+ years (We wish we could have started doing this even earlier. Oh, well, it is better than doing it too late - like only after our kid has grown up. It would then be really late for the “investment for retirement” game.)
We did not know anything about it (investment, for retirement) at first. We just heard it is good to put money into it regularly so we did. We just randomly chose some “balanced investment (mutual fund) account” (it means 60% stocks and 40% bonds in those early years, I think.) In those early good years, everybody who has a pulse seems to be able to have a relatively good return over a longer period if they had a balanced and diversified investment. I later learned about the indexed fund like SP500 and the importance of having a lower investment fees charged by the investment company or “financial planner” from such a company. So I mostly invested our retirement money on low-cost SP500 mutual fund if I did not know a better way to invest it. Many may invest their post-tax money also but I do not (likely not a good strategy to invest your pre-tax money only though. I also heard Roth 401K/IRA is good if/when you start young.)
I am definitely not a good investor. But at least I know it is good to be in the game as early as possible and stay there for a long run.
@julliet Good for you for thinking ahead. I hope my kids do the same at your age!
You had said that you are concerned about stocks because of the risk. When you invest in a 529, for a young child it actually makes a lot of sense for that investment to be stock-based, usually in the form of mutual funds (large groups of stocks). Historically, stocks make the biggest gains over time, but are also riskier. When the child is young (or non-existant) is when it is easier to tolerate more risk because the day you need the money is far off. As the child gets older, the investment is moved (often automatically if you use an age-based 529 plan) to less risky things like a money market account.
When I was in my late 20s actually also just after finishing my PhD, a friend of mine gave me a book by Susie Orman. You might want to get something like that. It was easy to understand and get a start on things money-related. After that I read the book about index mutal funds by Jack Bogle, recommended by my father-in-law.
Definitely contribute tp your 401k first before a 529. If you are a postdoc and don’t have access to a 401k or 403b, then use a Roth IRA.