School has just ended and area seniors have graduated. Two-and-a-half months of hot fun in the summertime (to quote Sly and the Family Stone) are just beginning. I value that freedom from books and schedules and rules.
But always in the back of my mind is a plan that takes discipline and schedules and rules. A plan for how to stay afloat in the wake of a billowing wave of higher food and gas prices. Higher college tuition. Higher everything. So, even though seniors graduated last night, today they still need a plan and so do you (and so do I!).
Anu, a blogger mother, left a comment for us. Her sons are 8 and 6, and she wanted to know how to save more than they currently save for their sons' college expenses. Their current disciplined savings plan is $100 per child every month. That is a fantastic start, especially since there is still ten years until her oldest child graduates. At that rate, they will have, at current savings interest rates, somewhere over $12,000 for their oldest son - or, the cost of one year of college at today's prices.
Additionally, the family earns more than $100,000 per year. There are other saving instruments available that earn a higher return than a savings account, but I am not a financial analyst and can't give that advice with a guarantee (can anyone?). This is the surest advice to Anu and others making between $70,000 to $110,000 wanting to up the odds on paying for college:
Bad news - at your current income level - and surely that will rise significantly over the next 10 years before your oldest is in college - the tuition deduction on income taxes is almost nil and so are need-based scholarships. Unless you are willing to not buy any new clothes, turn your heat and air way down, take fewer showers or put a brick in the toilet tank, and use leftover meatloaf as the base for spaghetti sauce, I can't tell you any way to get more money out of your salary. Live on less. I can't say it enough.
There is a savings instrument called a 509 Savings Plan into which any family member can contribute and the good news is it's tax deductible without having to file the long form, but you will have to check with your state to see if it participates in the plan and if it's tax deductible.
My best advice in light of your stated income is:
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Make your boys study every night - have a place or time specifically for studying and monitor that they are doing it and continue to do it through their teen years (that's when people relax and stop studying/monitoring), so that it is a habit.
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Practice for the ACT and SAT (but not right now at 8!). Take it several times. It has been my students' experiences that colleges start looking at 27 - 29, but 32-33 is preferred for scholarships at prestigious schools.
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Mold your boys into active participants in school, from course work to extracurricular activities and enrichment opportunities such as fieldtrips, summer programs, music lessons, sports teams, etc.
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Now, when they are little, make them save half of all the money they get from birthday presents, yard work/chores/allowance. It doesn't have to be half, but there is a great story about Rockefeller (I think) who taught his children the secrets of financial independence that way. Pay yourself first, in other words, and live on less than you have. I have had so many students who have tried hard, earned good grades, been magna cum laude, only to find there is no scholarship money for the middle class, unless one has a knock-out ACT or SAT score. So, save, strive for excellence, and make sure your children understand the goal.
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Know your own goal and continue saving.
So, school's out for the summer. Put that hectic schedule on the back burner, but keep the pot simmering on ways to advance the little ones' opportunities. As much as there is ever a guarantee, this will ensure many great summers for the rest of your lives!
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