Personal Financial Planning Lesson 4 - College

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The U.S. Census Bureau did a survey a few years back and revealed that the average income for a male age 25 or over who holds a college’s degree was about $61,000, compared to about $32,000 for a male with a high-school education. A separate study according to the Postsecondary Education Opportunity Research shows that the lifetime earnings of families headed by individuals with a bachelor’s degree will be about $1.6 million more than the incomes of families headed by those with a high-school diploma.

I can’t stress enough the importance of livelong education and how education plays an important role in our financial well being. Of course, we shouldn’t just compare the monetary advantage of a having a higher education because there are many other skills that are ought to be learnt from school. However, it is still easier for us to measure it in terms of dollar and cents inside our financial plans.

college thumb Personal Financial Planning Lesson 4 College

Invest In Brains

Saving money for a college education is like putting aside a sum of money for an investment you are going to make in future. Instead of investing in traditional financial instruments out there, you are actually “investing” in the brain of your child when the time is ripe. Most parents may start saving for their kid’s education fund while the child is still very young. And many will have this common concern of whether their child will want to go to college or even have the academic skills to advance. My advice is, just plan and factor the education fund into your financial plan because we do not want to deprive our child the opportunities to advance because of financial woes. In the end if the child really decides he does not want to pursue the higher education, we can always transfer the funds into our retirement funds.

 

2 Considerations

Two of the major factors we need to consider when planning for college education fund are the ever increasing tuition fees and whether you consider a public college or a private college. For your info, the costs of education have increased by 8 percent every year for the last decade and if you consider the state-supported public college, it sometimes 50%-75% more affordable than private college.

If you have started planning and wanted to fund your children college education fund when they are still young, you should actually set the goal as the top priority inside your financial plan. Most parents would have planned their retirement when their children have finished school and able to support themselves. There are several different type of financial instruments out there designed for the college fund. Other than the traditional savings account, a trust account or the state-run education funds, one of the more popular options is the college endowment plan which is very much similar to a retirement saving endowment plan. But in most cases, parents will choose a mixture of the financial instruments out there as a way to save and hedge against the high cost of education.

 

Alternative College Funding

Do take note - it is not compulsory put aside 100 percent of the projected fees required for your children’s college education because there are several education assistance schemes available, such as scholarships, education grants, financial aid and other loans that will absorb some of the education cost for students who needed financial help.

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Last 5 posts by Rendell

January 11, 2009 · Filed Under Personal Finance

Comments

2 Responses to “Personal Financial Planning Lesson 4 - College”

  1. Dustin @ Beating the GrindNo Gravatar on February 22nd, 2009 9:10 am

    Couldn’t agree more. Education is critical in certain fields and in others just the edge you need to get ahead. Great article!

    Dustin @ Beating the Grind’s last blog post..Why Just About Everything We Do Doesn’t Matter

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  2. RendellNo Gravatar on February 22nd, 2009 9:41 am

    Hi Dustin,

    Nice to see you here. :)
    I think it is not just education, i.e job training, but it is important to have the mindset for continual learning throughout our life time.

    Thank for visiting!

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