Saving for Your Children’s Future
By John E. Bonfadini, Ed.D., Contributing Columnist;Professor, George Mason University

Prince William County school board member Herb Saunders once asked me, "John, why don’t 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 we’ll have plenty."

That 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 child’s 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 child’s college education. I won’t pretend to be a financial analyst and discuss the economic virtues of this methodology — I’ll 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. Don’t say the savings are for college and you won’t be as disappointed if your child doesn’t attend college. Each year many parents must face the reality that their child either doesn’t 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.

Let’s assume that you have saved $100,000 for your child’s education and he or she prefers to enter the world of work. You may feel disappointed, but let’s 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. Let’s 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 I’ve 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 doesn’t 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 parent’s life savings learning to party. If you have any questions about your child’s ability to handle the freedom, send them to the community college for a test run. It’s 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.

Don’t 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 nation’s, 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.