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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8153  
Subject: I Finally Did It Date: 6/5/2003 2:17 PM
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Well, after much help from people here at this board and quite possibly over-analyizing everything, I have opened 529 accounts for both of my boys. I decided to go with the Illinois BrightStart Savings plan to take advantage of the tax deductions for Illinois residents.

For the time being, I have started the accounts with monthly contributions into each account in the amount of $100. I think this figure will need to rise considerably to reach my goals but I felt it was more important just to get started and begin funding an account for each of them. As the dust settles, I will calculate out what the monthly contribution needs to be to reach my goals and then compare that with available funds and adjust accordingly.

Along that line of thought, does anyone have a particular calculator they have found useful to determine needed contributions to reach a particular goal? I know there are countless calculators on the web but just wondering if anyone has a personal favorite.

My first impressions are that the Illinois plan website leaves quite a bit to be desired but I think I can live with that. Again, I appreciate the assistance people here have given in answering questions and providing a different perspective. A heartfelt thank you to everyone here....

dt
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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5340 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 2:40 PM
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For the time being, I have started the accounts with monthly contributions into each account in the amount of $100. I think this figure will need to rise considerably to reach my goals but I felt it was more important just to get started and begin funding an account for each of them. As the dust settles, I will calculate out what the monthly contribution needs to be to reach my goals and then compare that with available funds and adjust accordingly.


Something that I have found works well for me is to start with a set amount as you have done, and raise it by $5 or $10 each period til it reaches the point that it's too much. Then back it down by the last increment, and stick with that. Then, every year, raise that amount by another $5-$10. I always did that at their birthday because it was a convenient time. At that point, you won't even notice it because it's only $10 vs. it being the entire $100 or whatever.

Something else that has worked for me and may work for others is that as expenses for my children have been eliminated, I have added that savings to what I set aside for college. So when they came out of diapers, I added the monthly diaper money to their college savings each month. And when they went from full-time daycare at a cost of $400 a week to full-time school with just afterschool care at a cost of $400 a month, I actually split the savings with them with half going into their college funds and half going to our retirement.

I actually started at something like $25 a week savings per child and have been at $100 per week per child for some time now. In addition, I still have other savings going to our retirement so that I feel like I'm funding both things.

The trick that I have found is to start small and then slowly ratchet it up. And if you do it with money you were already spending on them, you don't notice a thing.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5341 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 2:57 PM
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Something else that has worked for me and may work for others is that as expenses for my children have been eliminated, I have added that savings to what I set aside for college. So when they came out of diapers, I added the monthly diaper money to their college savings each month. And when they went from full-time daycare at a cost of $400 a week to full-time school with just afterschool care at a cost of $400 a month, I actually split the savings with them with half going into their college funds and half going to our retirement.

We did something similar with the baby and child care expenses. I also put all rebate checks I got in the college fund(I guess my own early version of Upromise).

The trick that I have found is to start small and then slowly ratchet it up. And if you do it with money you were already spending on them, you don't notice a thing.

Along with this, we pretty much save all raises one way or another. We're not using it so we can't be missing it.

The only thing I can add is that it's a little trickier when you have more than one child and they aren't the same age. I pretty much gave up trying to equalize things because we'd be paying for the same things for each child, collegewise and what wasn't in their names would get paid anyway.

rad

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5342 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 2:58 PM
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2gifts,

Thank you for sharing that approach! It really makes sense to increase the amount in gradual increments to avoid the potential for cutting things a little too closely. That was one of my concerns when establishing the amount to contribute and thus the reason I started with $100 per month for each child.

It is also a very good idea to funnel any eliminated expenses into their accounts. I had not really thought of that either. However, we won't have the big savings like daycare as my DW is a SAHM but there are things like diapers, which hopefully won't be too much longer! :)

In addition to that, I think I will make unscheduled contributions to their accounts for birthdays, Christmas, etc. Getting these accounts established has been great and has renewed my motivation of saving in general. My goal is to be capable of financing their college costs at 100% and I will do my best to get to that level.

Thanks again for the great tips on how to ratchet up the savings!

dt

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5343 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 3:08 PM
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Along that line of thought, does anyone have a particular calculator they have found useful to determine needed contributions to reach a particular goal? I know there are countless calculators on the web but just wondering if anyone has a personal favorite.

This can make your heart stop but here's what I suggest. Decide what you want to pay for - tuition, room, board, books, whatever. Decide what type of college you are willing to pay for. Also, is there a limit to the number of credits or years you will pay for ? An alternative is to decide you will contribute $X to each child's college. It really helps both you and the child if you have a clear idea of what you're planning to do so there aren't any surprises when your kid's ready to apply to colleges.

The last time I did this(which was recently for a friend), I projected out a 5% per year increase for private college and an 8% increase per year for public colleges(I think this was last year's average). I ignored inflation. You get to the years you're planning to save for and voila - a total that makes you shake in your boots.

I think the calculators out there basically do something similar but whenever I look, they always seem to project for Ivy League colleges and for total expenses from a financial aid budget which I also think is high). They usually include something like 3% for inflation. Here's one to use, though :
http://www.finaid.com/calculators/

I have taken the head in the sand approach on what we've spent on educating our kids and plan to never, ever add it up :)

rad
going into year 5 of 10 having survived the first double year paying for college




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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5344 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 4:07 PM
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The only thing I can add is that it's a little trickier when you have more than one child and they aren't the same age. I pretty much gave up trying to equalize things because we'd be paying for the same things for each child, collegewise and what wasn't in their names would get paid anyway.

This is something I have struggled with myself. Our oldest is 4 and the youngest is 1, however we are getting started for both of them at the same time. My initial reaction is that we should save more for the oldest per month since he has less time until college.

However, as you mentioned, I feel things will balance themselves as we intend to pay for the college expenses regardless of how much we have saved before they start college. It is just the savings will make that expense easier to bear but I don't feel the oldest will be slighted in any way if he has less saved for college when he is ready.

rad, I am curious to know if you set an amount that each child would be "allowed" for college expenses? For instance, if child 1 wanted to go to a school that cost $8000 per year and child 2 wanted to go to a school that cost $15,000 per year. How was this balanced? Were they given $X as an allowable college expense that was the same for each child? This is another area where I would not want to slight one child over another.

Thanks for the feedback!

dt

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5345 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 4:16 PM
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This can make your heart stop but here's what I suggest. Decide what you want to pay for - tuition, room, board, books, whatever. Decide what type of college you are willing to pay for. Also, is there a limit to the number of credits or years you will pay for ? An alternative is to decide you will contribute $X to each child's college. It really helps both you and the child if you have a clear idea of what you're planning to do so there aren't any surprises when your kid's ready to apply to colleges.

rad,

Thanks for the information. Some of these were things I had not thought of, such as the number of years we will pay for college. As our kids get older, this will certainly be a frequent topic of conversation.

In researching another financial issue, I came across a calculator at Vanguard for estimating the needed savings for college expenses. I used $15,000 as an estimate for annual college expenses, used a 7% increase per year in costs and it did factor in inflation at I believe 3%. The numbers nearly knocked me out of my chair!

The calculator estimated the annual expenses to be roughly $40k per year in 14 years for a total of $160,000. My calcuation included paying for 100% of college expenses which resulted in a savings need of roughly $160k. My initial goal was to get to $100k for each child's expenses. Obviously, my current amount of $100 per month will fall way short but roughly $500 per month would reach that goal.

I will try the calculator you passed along and estimate out a few different scenarios. However, now that I have officially started saving for college (versus generic savings that could be used for college), I feel much better even with the astronomical numbers.

dt

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5346 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 4:37 PM
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rad, I am curious to know if you set an amount that each child would be "allowed" for college expenses? For instance, if child 1 wanted to go to a school that cost $8000 per year and child 2 wanted to go to a school that cost $15,000 per year. How was this balanced? Were they given $X as an allowable college expense that was the same for each child? This is another area where I would not want to slight one child over another.

We are not the norm, I think. We granted equal opportunity. Each kid is allowed to go to the college of their choice - 4 years room, board and tuition. We wanted them to go where they felt they had the best fit. We made it clear there were no financial incentives to going to a cheaper school. I did strongly encourage them to go out of state because of the direction higher ed was headed in our state. There was always a "cheap" option in the mix(my husband is in a less than stable industry), though.

The thinking was that they had to work to get where they wanted to be and to stay there. They are also clear on the fact that this is a gift and we are planning on leaving any great inheritances. Honestly, we also allowed them to chose high schools and it's pretty much evened out in the end.

Where it might have gotten sticky and I have no idea what I would have done is that my daughter had mono the fall of her soph year and ended the semester completing 13 credits. Had she said I can't make it in 4 years, I'm not sure what I would have done. However, the standards were pretty clear from us but as it turned out I think the AFROTC standards also helped.

Now she had a scholarship and my son went the one place he didn't. However, there was a semester when she changed majors and I paid because the scholarship didn't. Also, her college had some incredible increases so the last 2 years we still had tuition to pay. I also made it clear when she accepted the scholarship that this was her choice. A large part of the reason she did was the stipend and book allowance which helped cover what she needed to.

I think we may have gotten a question sometime - what if I pick this because it's cheaper ? The answer was nothing.

I really don't know how other people decide but I'm pretty sure we're in the area of weird on this one.

rad

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5347 of 8153
Subject: Re: I Finally Did It Date: 6/5/2003 5:06 PM
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I think we may have gotten a question sometime - what if I pick this because it's cheaper ? The answer was nothing.

In my opinion, I think this is the key point to making that scenario work. If the kids know upfront that they will not benefit at all by going to a cheaper school, I think it avoids the kids picking a school based on potential monetary gain. However, that could have the reverse effect where they decide to go to the most expensive school! :)

I would love it if we are able to handle college expenses in a similar manner to how you have done. It would make me feel very good if my children are able to go to the college of their choice without having to factor in the costs involved.

I applaud my parents because I elected to go to a small, private university where tuition was quite higher than public schools. They did their best to pay what they could and I did my best to contribute. I worked for the university year-round and all my earnings went towards my tuition. In addition, I graduated with roughly $20k in student loans that I now have down to $9k.

The hard part was that when I moved out of the dorms to live in an apartment, all my living expenses had to be paid by me. My parents mentioned their intention to give me the amount equal to Room and Board but they did not. It resulted in many meals of Ramen or bologna!

My goal is to be able to provide my two kids with 4 years of college expenses, to the college of their selection, and not have them be paying any student loans when they are done. While I don't regret how my college experience went, I think it would have been easier to not have to worry about where my next meal was coming from while I worked two to three jobs and studied.

Congrats to you and your family for the fine job you have done in affording the kids college expenses!

dt

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5350 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 11:13 AM
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This is something I have struggled with myself. Our oldest is 4 and the youngest is 1, however we are getting started for both of them at the same time. My initial reaction is that we should save more for the oldest per month since he has less time until college.


Maybe it's that I started saving before all these college savings programs existed, but I find that although I allocate each child an amount per week, it all goes in one pot. There is one exception in that they each have a 529 plan, but I actually have the bulk of their savings in accounts that are in our names and not the children's names. I did this for a few reasons, and I'm thinking some of this may actually be applicable to people with children of different ages.

First, I wanted control of the money and wasn't willing to give them full reign over the money we had saved for their college when they turn 18. And that's what would happen if I had given the money to them outright as a UGMA. Somehow, I wanted to know that neither of them would be running out with my hard-earned and well-saved money to buy that neat sports car, so I kept the money in our names.

Second, I have never believed that I need to spend equally on them. I intend to spend to their need level, and I expect DS to have much higher and more expensive needs than DD due to his issues. So with the money in our names, I can spend it however I see fit.

Third, I did not want them choosing their college based on how much money would be left for them to spend out of the college funds. I want them choosing college based on what they want to do and which college offers the best program for them. I am saving towards an Ivy League education, but that's because I'm trying to make sure there is enough money for them each to go wherever they want. I do not want financials to necessarily enter into that equation.

Fourth, I want flexibility with my money. We are also saving madly for our retirement, and it will be our choice when they reach college age if we choose to give them whatever is left of their 'college money' or if we choose to use it for our retirement. In addition, if we were to have some sort of disaster like a medical issue or the house burns down, I would not be able to use any money in their name as it would belong to them. So to keep maximum control of the money, we have left most everything in our name fully understanding that there are tax consequences.

My kids will not qualify for financial aid as I make too much money, so I have taken the approach that I might as well save as much as I can. I do expect them to fund some of their education, and may choose to let them take out loans but then give them the money once they graduate to pay them off.

All of this was done because of the above reasons and the fact that there just were not as many choices when I started saving. But I would think doing some savings outside of specified college plans may help in terms of funding children of different ages, though I would still opt to put some savings into a college account like a 529 for each child anyhow. And for the older one, I might choose to put in a small kicker to sort of catch up since I hadn't started saving when that child was born. But in my case, I was actually saving for their college from before they were born [did I mention that I am a compulsive saver?].

Hope this helps to give you some food for thought.

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5351 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 12:29 PM
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2gifts wrote, "My kids will not qualify for financial aid as I make too much money, so I have taken the approach that I might as well save as much as I can. I do expect them to fund some of their education, and may choose to let them take out loans but then give them the money once they graduate to pay them off."

This is something I am concerned with as well. Based on some of the financial aid calculators I have used, and using the numbers as they exist today, we will not qualify for any financial aid.

If you don't mind sharing, the money that is in your name but ear-marked for college, is that in taxable accounts? Or have you done something else with that money?

I contemplated doing a UGMA account and raising my kids with the knowledge that those funds were expected to be used for their college expenses. If they decided to spend it on something else, then they were on their own for college. Maybe that would be giving them too much credit but I would hope we raise our children to be financially responsible.

I kind of like the idea of keeping some of the money in my name, as that offers a little more flexibility. As I look into this more, and bump up the amount going to the 529, I will investigate the other options. I appreciate the feedback on alternatives to saving for college, it has opened a lot of additional things for me to look into and decide what will work best for us.

Thanks!

dt

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5352 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 12:46 PM
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If you don't mind sharing, the money that is in your name but ear-marked for college, is that in taxable accounts? Or have you done something else with that money?


Yes, it is in things like brokerage accounts and DRP's. In fact, what I do is send $50 per child every two weeks to their 529. And then I send another $300 every two weeks to one of the DRP's that I am currently growing. In my mind, these are the funds for their college, but the fact of the matter is that I will use whichever stocks and DRP's make the most sense at the time. I also have a sizeable amount in taxable accounts that is earmarked for our retirement. This is in addition to things like 401k's and IRA's.

I contemplated doing a UGMA account and raising my kids with the knowledge that those funds were expected to be used for their college expenses. If they decided to spend it on something else, then they were on their own for college. Maybe that would be giving them too much credit but I would hope we raise our children to be financially responsible.

My kids each have bank accounts as well as brokerage accounts and DRP's. These are all UGMA [except the bank accounts for some reason]. This is where they put things like their allowance and gifts they want to save. My thinking is that this money is theirs for whatever they choose to use it for, and I actually use these accounts to teach them money management. I just wasn't willing to trust that they'd learn the lessons well enough so that I'd want them to be able to make those decisions at 18 nor was I willing to necessarily give them all the savings if there is extra as I might want that for my retirement. My goal is to educate them. It is not to enrich them by saving a big pot of money. I intend to teach them that skill on their own.

What I do with their allowance is give them each $10 a week as ten one-dollar bills. They have 3 envelopes each marked Short, Medium and Long, and they put a set amount out of the $10 into those envelopes each week. Out of the $3 they put into Short, they are expected to put at least 50 cents in the basket at church each week. My DD also uses hers to pay her $2 Girl Scout dues every 2 weeks. And the rest is there to spend as they please.

The Medium is for things they need to save up for like birthday presents, Boy Scout dues [DS has to pay $35 all at once], spending money for the church fair and town fair that happen 3 weeks apart every September, and anything large they want to purchase that can't be covered by Short.

Long is labelled college, 8th grade trip, and car. OK, DS really has 'viper' written on his, but I don't have the heart to tell him that I don't give him quite that much allowance. I will match dollar-for-dollar anything they choose to send to their DRP account, and that includes if they choose to send money gifts they may have received from others. They do love the matching gift program :-). Note that the 8th grade trip takes place in 2 years, but that's long-term enough for them. The rule is that I expect them to pay for half of the trip as well as provide their own spending money. They each already have enough in their savings account to cover the whole trip, so they do get it.

As part of teaching them to manage their own money, I have also let them choose which stocks they want to buy when it has been time to choose a DRP. They do have to choose off of Mom's pre-approved list, but they pick. And they understand that stocks go up as well as down, but I also want them to learn that lesson early. So although I do expect some of their savings to be used towards college, I really am using their UGMA accounts as teaching tools for managing money.

Oh, my kids also both have Roth IRA's. They put in any money they earn when they work for their dad [I pay them with a check] as well as the money they earn pet-sitting. And they have quite a little business going. In fact, DD earned $100 for watching a friend's cats while they were on vacation for 3 weeks, and we only had to go visit the cats every other day.

So I prefer treating college savings as part of the entire financial picture including how I teach the kids to handle money.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5353 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 12:47 PM
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I contemplated doing a UGMA account and raising my kids with the knowledge that those funds were expected to be used for their college expenses. If they decided to spend it on something else, then they were on their own for college. Maybe that would be giving them too much credit but I would hope we raise our children to be financially responsible.

Somewhere I have a list of the age of majority for each state but it's not on this computer. Check for your state. My state(CO) is 21 which made any concern irrelevant because for 2 of my kids, that would be the beginning of their senior year in college so most of the money had /will have been used.

One thing I recently found out is that it's not a slam dunk for the money to get released when they hit the age of majority. The custodian has to authorize turning over the account for the ones I've tried to do.

Our kids were very clear on the fact that the UGMA money was for college. Had anyone wanted to do something else, it would also have been made clear that it was the last money they'd ever see from us. We used UGMA for most of the money since our kids are now 21, 19 and 15.* The tax rates were significantly higher when they were young and it was very clear early on that we wouldn't qualify for any need-based aid. Both of the older 2 did get offered a good amount of merit aid and one took some of it.

We also had none of the current savings options until at least the oldest had hit high school. Well, except the savings bond thing and I could see we wouldn't qualify for that.

rad

*One thing to think about with UGMA is what will you do when they start working in terms of tax issues. I tried to give them what they would have gotten back without the investment income/gains. Since after 14 is the time to sell and about the time they start working, it's something to think about.


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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5354 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 2:14 PM
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rad and 2gifts,

All I can say is WOW! You have both given me a lot to think about and see what may work in our financial planning. I am feeling a bit overwhelmed and I apologize if it seems I am asking too many questions.

2gifts, I am guessing your kids are somewhere in the neighborhood of 12-13 years old, is that correct? If so, at what age did you implement the plan with the three envelopes for savings? My kids are 4 and 1, the little one would not understand the concept but I think the older one is getting to the age where he might understand.

He currently has his piggy bank where he stashes loose change that he finds, as well as the little monetary awards he gets for helping out around the house any more than would be expected. For instance, he doesn't get anything for cleaning up his toys as that is expected but if he goes out of his way to be helpful with his younger brother or something, he gets a dollar.

rad, thanks for the suggestion on checking on the age of majority. As you mentioned, depending on the age, the kids may be just about done with school by the time they reach the age of majority.

I am still trying to balance the retirement savings with saving for college but I just get the feeling like I am not doing enough. But by the same token I don't want to rush and do too much and strap the budget. I appreciate all the advice and assistance you have both been providing to me!

dt

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5355 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 2:36 PM
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He currently has his piggy bank where he stashes loose change that he finds, as well as the little monetary awards he gets for helping out around the house any more than would be expected. For instance, he doesn't get anything for cleaning up his toys as that is expected but if he goes out of his way to be helpful with his younger brother or something, he gets a dollar.

Hmm,

you might want to read this article :
http://smartmoney.com/mag/index.cfm?story=may03-kids-investing

be sure to go through all the parts. There's some good stuff on allowance - particularly the woman in the cast part.

rad


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Author: Jamoc Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5356 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 2:50 PM
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I am still trying to balance the retirement savings with saving for college but I just get the feeling like I am not doing enough.

I'll second this notion but I give retirement the priority. I can get loans and other help for college. I don't have that kind of help for retirement.

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5357 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 2:56 PM
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2gifts, I am guessing your kids are somewhere in the neighborhood of 12-13 years old, is that correct? If so, at what age did you implement the plan with the three envelopes for savings? My kids are 4 and 1, the little one would not understand the concept but I think the older one is getting to the age where he might understand.


My kids are 12, and I wanted to start allowance as early as 8, but my kids have never been the type that wanted anything or kept asking for things, so there was no need or push to get it done. I waited til they were 10, and then I just started anyhow. I did find, though, that I had to create expenses for DS so he'd have some practice on managing his money. You'd think that kids not having any wants would make it easier, but it actually makes it harder because they're not spending anything, so there's nothing for them to learn trade-offs on or have to decide between.

My kids have both shown a real interest in money, however, but a lot of that might be because I am a very active manager of our money, and money is a frequent topic in our house. In fact, this year they both did book reports on the book 'Growing Money' which is an excellent book published by Scholastic that is geared towards explaining money to children.

Something else that I have done before I was giving them an allowance was to let them make financial decisions with my money. The trick to that, though, is to let them make choices between things that are both acceptable to you. For instance, DD has always loved to go out to dinner, but when we were building our new house [they were 8 when construction started and 9 when we moved in], money was a little tighter. One day, she wanted to go out to dinner. As we had spent all that day picking out light fixtures, I told her that she could choose between going out for dinner or going back to the light store the next day to pick out a less expensive light fixture for her bathroom. That way, the choice on how to spend the fixed amount of dollars was hers, and I was OK with either, though my preference was obviously the choice with the longer-term impact. I was pleased that she thought about it, and decided she really liked the fixture she had picked, and she didn't want to have to compromise it. I cooked that night.

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5358 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 5:09 PM
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reallyalldone: "you might want to read this article :
http://smartmoney.com/mag/index.cfm?story=may03-kids-investing "


Seems to me the author is a Fool, and certainly had access to real Fools on these boards.

Regards, JAFO




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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5359 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 6:17 PM
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I'll second this notion but I give retirement the priority. I can get loans and other help for college. I don't have that kind of help for retirement.

While I do agree with that, my concern is that we will not qualify for any financial aid and about the only options I can think of are tapping our home equity or a personal loan.

That is the reason I would prefer to do what I can to at get as much as possible saved beforehand, while still maximizing at least my tax-advantaged retirement savings.

dt

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5360 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 6:20 PM
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you might want to read this article :
http://smartmoney.com/mag/index.cfm?story=may03-kids-investing

be sure to go through all the parts. There's some good stuff on allowance - particularly the woman in the cast part.


Thanks for the article. It has been bookmarked and will be read tonight once the kids go to bed! I am looking forward to it.

dt

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Author: japper Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5361 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 8:02 PM
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My daughter started receiving an allowance around age 3. She understood that those silly machines required quarters, and she had to earn them. If she did her "work" then she earned her "paycheck." We have continued this process, adding more work each year in January with a raise for completion. She understands (and has since the beginning) that paychecks are only earned for work that is completed.

She has managed her own money and accounts since kindergarten, age 5. She uses her Quicken accounts and enters each paycheck and corresponding spending, saving, investing activities.

She reads the annual reports of the companies that she invests in each time one arrives. I developed a spreadsheet where she can enter the quarterly numbers and they run down to ratios that she can determine if the company is doing better or worse from the prior quarter.

One of her jobs added this year is the grocery list and budget for same. She clips coupons and does a pretty good job of staying within the limits.

How did we start all of this? With a quarter for the silly machine, and as each time rolled around we talked about money. How do people earn money--from working, from investing, from saving. How do people make decisions about money--impulse, research, wait, talk.

In kindergarten, she used to spout about her ownership of stocks and would go into spiels over saving and investing to her peers, whose eyes promptly glazed over. In third grade, she needed an extra project so she researched and wrote about the history of money.

I am sold that it is all about talking with your kids about money, sharing your household budgeting, making joint decisions, etc. Kids do listen even when the television is blairing Lizzie McGuire, they do remember.

Enough.
Jenn

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5362 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 8:10 PM
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reallyalldone: "you might want to read this article :
http://smartmoney.com/mag/index.cfm?story=may03-kids-investing "

Seems to me the author is a Fool, and certainly had access to real Fools on these boards.


Yup, I'd agree with that. And if people read it closely, I'm sure a few of the folks interviewed will look very familiar.

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5363 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 8:13 PM
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In kindergarten, she used to spout about her ownership of stocks and would go into spiels over saving and investing to her peers, whose eyes promptly glazed over. In third grade, she needed an extra project so she researched and wrote about the history of money.


As I mentioned, both of my kids did a book report this year on 'Growing Money' which is a Scholastic book aimed at teaching 9-14 year-olds about money. But I got the greatest kick out of when my DD came home from school after her oral presentation to tell me that her friend had told DD all about her stock. Seems the friend is very well-known for loving chocolate [all the kids typically put a Hershey bar on top of her birthday presents instead of a bow], and she had bought some stock in Hershey. So here were these two 12-year-olds comparing notes on the various stocks they owned, and talking about whether or not they were pleased with their investment performance. I just got a big kick out of the whole thing and figure that some of what I'm trying to get across to them is clearly sticking.

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5364 of 8153
Subject: Re: I Finally Did It Date: 6/6/2003 10:59 PM
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you might want to read this article :
http://smartmoney.com/mag/index.cfm?story=may03-kids-investing

be sure to go through all the parts. There's some good stuff on allowance - particularly the woman in the cast part.


I just finished reading this article and found it very interesting. I am forwarding it on to my DW for her to read as well. All in all, after reading this I feel a little better that we are currently doing okay with what we are teaching our oldest and the concepts we are introducing to him.

In addition, I think we may start an allowance for him on his 5th birthday. I was very interested in the concept regarding the potential problems with tying the allowance to good grades and/or chores. That is how it always was for me as a child so that is what I assumed we would do as well. But it does make sense to separate the things out.

Also, the approach we have taken when he does have money saved up is that he can spend it on whatever he wants. Right now, we have not emphasized true savings but do make mention that he can spend the $2.00 on a certain toy or he can save it up for a more expensive toy. Sometimes he opts to get the cheap toy now so he has something and other times he decides to save the money for another day.

I have stock in 4 Kids Entertainment myself and my son gets a kick out of seeing the annual report as they typically have a very kid-friendly report with splashy colors and pictures of many of their products.

All in all, I feel we are on track with our oldest son as far as teaching him about money, allowance, savings, etc. In a few months when he turns 5, we will start the official allowance. I did like the segment about the woman in the cast and her child's friend making that comment. Hopefully, that is the scenario we can avoid!

Thanks again for that article rad!

dt

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Author: japper Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5365 of 8153
Subject: Re: I Finally Did It Date: 6/7/2003 12:17 AM
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2gifts,
That is a great story! Thanks for sharing.

We have read the same book and enjoyed it. It would make good bedtime reading for younger children although it is not as exciting as the regular bedtime stories.

If your kids have a good appetite for reading, they might try one of these:
1. Early to Rise, by Michael Stahl (he was a teenager when he wrote it).
2. Street Wise, by Janet Bamford (published by Bloomberg Press).

Both are pretty easy to read, and the kids just may enjoy them too.

For the grownups looking for ways to teach kids about money, I would suggest:
1. Wow the Dow, by Pat Smith and Lynn Roney.
2. Kids, Money & Values, by Patricia Schiff Estess and Irving Barocas.

NOTE: while recommended, that does not imply that I endorse everything that is stated in any text, but they are good starting points or reinforcements to thoughts on teaching kids about money etc.

Jenn

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Author: NetKaren One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5367 of 8153
Subject: Re: I Finally Did It Date: 6/7/2003 6:08 AM
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D-

I do not use any of the calculators--they can make you absolutely crazy! Lately, I've been obsessing about college costs (which is why I am awake at 5 a.m. on Saturday!) and there are so many unknowns, well, the calculators don't help me at all. Some of you know I've also been struggling with how to balance saving for different kids of different ages--still working on that one.

I took a different approach though, I set a goal of having my son's college tuition (8 semesters, public university) paid for by the time he turns five years old. I then adjusted our budget accordingly to make room for the significant monthly payment. If he goes to private university, we can make up the difference or he can make up the difference through working, loans, scholarships (hopefully!), grants, etc. If we have "overpaid", that extra money can be transferred to the next child. (This works with the prepaid plan we chose.)

This approach is aggressive and we won't be able to afford the exact contribution for the next child (at least not in the first year), but I like the idea of using gift money from birthdays, etc. to supplement contributions!

Congrats on making the commitment, D! Doesn't it feel good?

-Karen


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Author: NetKaren One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5368 of 8153
Subject: Re: I Finally Did It Date: 6/7/2003 6:14 AM
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from the linked article:
knows the angst that comes when parents are confronted by the wide-eyed child who just saw you grab cash out of a slot in the wall. "You think, How on earth am I going to explain this?" says Walsh, whose youngest is now 10. "It's so hard when they're little to try and explain that money is not magic and it's not unlimited."

And even sometimes hard to explain when they are "not so little", if you know what I mean!

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5371 of 8153
Subject: Re: I Finally Did It Date: 6/7/2003 1:36 PM
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Congrats on making the commitment, D! Doesn't it feel good?

It does feel very good to have the roadmap out and have the initial course planned out. Of course there will be changes along the way as we investigate new things and increase contributions to different things, but it feels great to be started.

dt

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5372 of 8153
Subject: Re: I Finally Did It Date: 6/7/2003 1:39 PM
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And even sometimes hard to explain when they are "not so little", if you know what I mean!

We experienced that thought process with our 4 year old when he had witnessed us go to the bank and get cash from the ATM. Then we would be out and he would ask if he could get something or go somewhere for dinner, we would respond that we could not or ask him if he had money to pay for that.

His response was to just go to the bank and ask them for some more money. He clearly thought you could just go and they would give you more money. That was when we tried to explain the concept of working to earn a wage and putting that money in the bank to pay for your bills and the such.

I don't know if he really understood but he has not been making the same type of comments. At his age, I just want to start planting the seeds even if he doesn't really comprehend something at first.

dt

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