Saving for Your Childrens Future
By John E. Bonfadini, Ed.D., Contributing Columnist;Professor, George Mason
Prince William County school board member Herb Saunders once asked me, "John,
why dont we have any kids wanting to be plumbers?" My response to him was,
"When parents take out insurance policies for their children to be plumbers, then
well have plenty."
statement was made several decades ago and is probably more true today. As soon as a child
is born, many families begin to save for the childs future college education.
Grandparents, parents, relatives and yes, even the state may become involved to make sure
the money is available when little "Einstein" is ready to enter the ivied doors
of higher education.
Many states have some type of tuition savings plan where parents can save for their
childs college education. I wont pretend to be a financial analyst and discuss
the economic virtues of this methodology Ill leave that analysis to people
like Ric Edelman, who in his WMAL radio show cautioned parents to look closely before
investing monies in these plans. My analysis deals more with the psychology of investing
in the future education of your children.
I prefer a much broader approach when considering how to help children get a head start
on the future. Dont say the savings are for college and you wont be as
disappointed if your child doesnt attend college. Each year many parents must face
the reality that their child either doesnt have the desire or the academic ability
for college. I think parents should talk with their children about preparing for their
total future, which will include both a career and family life. Putting money in a state
college tuition plan tends to limit the scope of thinking and planning.
Lets assume that you have saved $100,000 for your
childs education and he or she prefers to enter the world of work. You may feel
disappointed, but lets look at the opportunity this decision provides. You could
develop a four- to five-year work plan with your child that would include giving them the
money if the work-plan objectives are met. If the child continues to live at home and
work, the parents could agree to assume living expenses with the stipulation that the
child save at least 75 percent of the earned income. Lets assume a modest
$20,000-a-year job which could net about $14,000. The savings each year based on my
analysis could be $10,500. Seldom do students finish college in four years. The norm is
more like five. Five years of savings and investments could produce an additional $70,000.
The $100,000 would continue to build and at a modest return could be at $130,000. Your
child now at the age of 23 has $200,000, enough to purchase a home, something that most of
us spend a lifetime paying for.
The average age at which young adults tend to marry has risen. This example student
could now choose to go to college, which many do. In my 20 years as a university professor
Ive had numerous students who returned to college after a stint in the military or
in the world of work. They also tend to do better than younger students who may have more
academic ability, but not the maturity to use it. I would also note that Bill Gates and
Walter Cronkite never finished college. College education doesnt guarantee you
economic or personal success.
Parents should be sure that their child has the academic background and maturity for
the college environment. We all know that time spent in college provides more than
academic growth. Some students waste their parents life savings learning to party.
If you have any questions about your childs ability to handle the freedom, send them
to the community college for a test run. Its far less expensive and provides them
time to mature and develop. All of us would like to say our children are attending one of
the prestigious colleges, but reality shows us that a large percentage will also come home
without the degree, many for non-academic reasons.
Dont put too much faith in a college education giving your child all the tools
for a successful life. Our politicians this fall will certainly emphasize education as the
key to individual, and our nations, success. Education needs additional financial
and public support, but I caution both educators and parents against thinking that
education alone can eliminate all of the negative elements in our society. The moral
problems we face as a nation go far beyond the academic preparation of our children, and
will need other groups and organizations to share the responsibility for a solution.
Its not where you start thats important: its where you finish. Only a
select few graduate from a four-year institution. Many of our citizens live productive
lives without a college education they live and learn in the real world, and many
are more successful than college graduates. As we deal with the entire population of this
country, lets seek to provide dignity and respect to all individuals regardless of
their educational level. As parents, we need to save to help our children prepare for
life, which may or may not include a college education.