My husband and I have started planning to grow our family, and the biggest ticket item I’m worried about is our children’s college educations. In 2020, it costs ~$13,000 per year – just in tuition – to attend my alma mater UCLA. So that’s $52,000 per child for a four-year period in 2020 dollars, which means it’ll be way more because of 18-20 years of inflation. That figure sounds very intimidating, especially if we have more than one child.
Thankfully, no money goal is too big. Whether you’ve set a goal that you want to reach within 1 year, 5 years, or 20 years, you can make it happen!
Let’s take my example: funding my children’s college tuition. (It’s a specific goal of mine because I did it all on my own through student loans. While I’m grateful for the opportunity, student loan debt is no joke and has set me back on a lot of other goals like buying my first home. Being able to fund my children’s college tuition has been a dream since I started my own college education, so that my own children don’t have the same setbacks I did.)
Let’s assume that we have two kids, whose total tuition cost would equal $104,000 (yeesh!) in today’s dollars. If we start today and set to reach this amount in 20 years, we would need to set aside a minimum of $434 per month every month until we send our little ones off to college, having invested that money into a tax-sheltered, high-return account. $434 is half of what my student loan payment used to be, so I can totally stomach that!
Finally, I’ll have to automate it. Automating any of your savings goals like this will ensure that you don’t fall off the wagon very easily! Most, if not all, savings accounts nowadays give you the ability to set automatic, recurring transfers from your checking account. So there’s really no reason for you to not do this once you have the income to do so. In other words, pay yourself first!
1. Set your goal and goal amount.
2. Set a reasonable time horizon, in months.
3. Divide your goal amount by the number of months you have to reach it into bite-sized pieces.
4. Automate it!