My daughter is 6 years old, this means I have roughly 12 years to put together a college savings fund so she can attend a 4 year college. As a single parent with a single income this requires some serious budgeting adjustments on my part. What has made this easy for me was a non-negotiable attitude towards putting together a 529 college savings plan, I must make sacrifices.
I started the savings plan process by contacting a friend who is a financial adviser at Morgan Stanley. I needed to see options available to me that included different tiers of saving. The financial burden of my daughters college fund from a legal standpoint is a 50/50 responsibility between both parents, because of this I wanted to see a breakdown with a few scenarios that I had put together.
The projected cost for an out-of-state 4 year college is $250,014 and $157,129 for an in-state college. This assumes a college cost inflation of 4% over the course of the next 16 years (including the 4 years she attends).
- Scenario 1: 50% contribution
- Scenario 2: 75% contribution
- Scenario 3: 100% contribution
- Scenario 4: 75% contribution (in-state)
I wanted to see multiple contribution options to help me plan for the worse case scenario. I do not like to make assumptions nor do I like to depend on others in financial situations especially when my daughters education is at stake. I want my contribution to ease any shortcomings should something in the future happen to my ex-spouses ability or mine to contribute to our daughters college fund. I do not foresee any issues, but planning for the possibility is the smart decision.
I think the single best piece of advice given to me by my adviser was this. “You do not have to choose a plan now, but you should open an account as soon as possible and put any amount you can into it to start the process, even if it’s only $25 a month. The time that you have to save is only getting shorter.”
I have chosen to make the 75% contribution to the 529 college savings plan, it is more than I am financially obligated to, but my daughters education is not something I am willing to gamble with. It is my responsibility to give her the opportunity to attend college and as a single parent I cannot rely on what should happen, or could happen.
I would like to hear other parents experiences in saving for college. Mistakes made, lessons learned, do you have multiple children? What plans are you making to help their future?