Should we save for our child’s post-secondary education?

Should we save for our child's post-secondary education?

The discussion around the dinner table a few nights ago started with Mr. Unchained’s simple question: When is one considered an adult?

To his annoyance, I replied that it depended entirely on the situation. Despite his urging to just give him a number, I said that it depended on the given situation and the individual’s maturity in life. For example, should a 17 year old who has consciously committed a terrible and premeditated violent crime be tried as an adult? Or should their age dictate a more lenient sentence? In my opinion, probably not.

What makes an adult?

In a non-criminal, everyday sense, I think one of the major determinants of being an adult is the capacity to be wholly responsible for oneself and be financially independent. I say “capacity” because I can think of a few instances where an adult remains financially dependent on their parents while pursuing graduate studies. However, had they not been in school, they would have been out in the workforce and would be financially independent.

So to answer the titular question, I think you must first answer, “What is a parent’s financial responsibility?” I’m sure the answers may vary widely but in our opinion, a parent is responsible for providing the basic life necessities. Everything else should be worked for and not given freely. For the most part, this is how the “real world” works – if you want something, you’ll have to work hard for it. I think this would also help reduce that sense of entitlement that seems to be so incredibly rampant in our society nowadays.

For example, I plan to provide the basic amount of clothes and shoes our kids would need, some of which would hopefully be hand-me-downs. However, if our kids decide they want certain brands or a 10th pair of jeans, that’s something they’d have to work for and buy with their own money.

Is post-secondary education considered a necessity?

Mr. Unchained was on the fence on this one. At first, he thought that one should be financially responsible for their own post-secondary education. This would mean incurring large amounts of debt for an undergraduate degree and starting off one’s adult life with a heavy debt load. However, I thought that post-secondary education in our society should be considered a basic life necessity which parents should make every attempt to provide for their children.

While I know there any many people who don’t really value post-secondary education the way society used to, I do feel that people with relevant post-secondary degrees go miles further than those with only a high school education. (I say relevant because my psychology major would have only been useful had I continued with my original plan to pursue a PhD to be a Psychologist.) Sure, you’ll always hear those stories of people with post-secondary educations working low-paying jobs contrasted with driven people who carved out their own successful destinies with only a high school diploma but I sincerely believe those are the rare exceptions, not the rule.

My thoughts are that if we are financially able to, we should provide for our children’s post-secondary educations. Graduate studies, however, would be our child’s decision and financial responsibility (unless there is money leftover in the education fund or we are magically wealthy by that time.) This would also help our children not start off their adult life saddled with crippling debt, allowing them to save their first salaries for things like their own homes and vehicles.

Having said that, I would definitely encourage our children strongly to get summer jobs (and part-time jobs if their school schedule allows for it). I don’t plan to be handing out spending money, they’ll gain experience working and will hopefully get into the habit of saving part of their paycheck!

What are your thoughts on post-secondary education?

Would you or are you saving up for your children’s post-secondary education? Would you encourage your children to pursue post-secondary degrees, or do you think a high school diploma is sufficient?

Mrs. Unchained 55

11 Comments

  1. Good post and a very important issue. We decided to first max out all of our own retirement savings. Then save a modest amount in a 529 account. That will pay more than half of a 4 year college degree at a state school. But not the whole thing. If Little Ms. ERN wants to go to college she has to have at least some skin in the game, thus, either work or get a small student loan.

    • What are tuition fees like at a state school? In Canada, university tuition is currently over $7,000, not including books. Tuition is only going to rise ( it was about $5,000 straight out of goh school ten years ago) so I wouldn’t be surprised if we needed at least $40,000 for tuition alone!

      I think it’s great when students have to learn the value of education by participating in at least some of the costs – perhaps textbooks and residence if they choose to move away from home.

      Our plan is to max out the education savings plan (more on that in a post to come!) and then save whatever we can for retirement from whatever is leftover.

      • Just like in Canada, college inflation is insane here in the US. The price tag depends on the state, but it can easily be around 10K per year just for tuition, plus other fees and living expenses. By the time our daughter goes to school (she’s only 2 right now) I wouldn’t be surprised if the total price tag is $100K+. We should have achieved FIRE by the time she starts college and we will make sure to move to a state with decent schools and affordable college tuition a few years before. 🙂
        We will max out our own finances first and invest what’s left over in the 529 ciollege plan. Our thinking is that our daughter will be young with a productive work life ahead of her, she can handle a small student loan better than my wife and I facing money problems in retirement. And if we see that we’re safe and sound with our finances, we can always help her pay off her student loans later.

  2. We go back and forth about this. I was blessed to get a significant scholarship for my undergrad and went after any and all resources to make my graduate studies as cheap as possible. It was a struggle because I was not necessary the smartest student, but I worked super hard. I truly want to pay for my kids’ undergraduate educations. My husband was the opposite. Super smart student who did not pay a dime for his education and in fact was actually paid to go. His view is that we shouldn’t pay for it and have them find scholarships.

  3. I’m not saving for my child rather I’m investing for his future. When he was born a little over a year ago I started a dividend income portfolio in his name and filled it with a handful of dividend paying stocks. The plan is to grow that account slowly over the next two decades or so and reinvest all the dividends received and create a passive income stream for him. The account is a regular custodial account so it comes without any strings attached unlike a 529 which is designed to save for college. I’m not really sure what value a college education will have in about 20 years as costs rise and the value of a degree diminishes.
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  4. I also have mixed feelings about the value of a university degree. I paid for both my kids, my son has a great job but my daughter’s job is not so great. However, the experience did help them mature compared to my newhew who only went as far as high school.

  5. I definitely plan to invest in 529 plan when the time comes =) and strongly believe bachelors degree will be necessary. I am not sure what the equivalent is in Canada. First time stopping by your site. Keep it up =)

    -TDM
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  6. My child was planed so was his higher education. I brought a child to this world I will arm him with the best education we could afford. We are saving toward it along with out retirement etc. I think if you planed to have children then you should think about how will you are going to pay for their education,too. My parents made me understand that attending college and doing well was my job, and thus I would do only that. No screwing off, and no part-time jobs for spending money. I was to study and earn As, end of story.

    • That’s how I feel as well – I’d like to be able to provide post-secondary education for my children, as long as they don’t take it for granted! I think it’s still possible to work part time and excel at school (I did it!) so I wouldn’t be opposed to them being partially responsible for their education (e.g. books, or transportation to campus, etc.)

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