EP33 – Preparing For College Financially
Numbers don't lie. The sooner you get started the easier it is, but don't fall into a trap.
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Hey, welcome to this episode of I don't know Jack about parenting where today I'm going to talk about one of these taboo subjects, something that probably wasn't talked about in your household. We're going to talk about money and preparing for college plans.
People are uncomfortable talking about this subject
Hey, welcome back to this episode of I don't know, Jack, about parenting, where today I'm going to be talking about money, one of those taboo subjects that for whatever reason in this country and maybe around the world, I don't know, nobody really talks about too often. I find that in men's groups or as I talked to him in, one of the things that is definitely not talked about or wasn't talked about in her household was money. Whether that's how to make it hot to say it, what to do with it. It's just something that for some reason people are uncomfortable talking about this subject. So I'll give you a little background just so that you know, that I'm not just some guy like Anna because money wasn't talked about in my household growing up or if money was talked about, it was about the lack thereof or we can't have this because we don't have enough money. Or um, it just, it just wasn't really talked about. So I decided when I wanted to go away to college, when I earned a scholarship because there was no other way I was probably going to go. I decided to really early on that I was going to focus in an area called finance because it was the study of money and how to make money work for you.
So to today's topic. My, my thought was the other day I was in a dad's group and her dad had a newborn baby and he's like, dads, what do, what do you think about this idea? I want to save $10 a, I think it was a week on there so can save $10 a week every week until my kids off to school. By the time I'm done there'll be like over $10,000. And I was like, are better be a whole lot more than $10,000. It was my immediate thought. Then I just kinda did the simple math. Right? So. And this was a few days ago, I didn't do it. I just kind of did it in my head. So I'll share it with you here 10 times 50 is $500 a year times 20 years. $10,000, right? We got those two extra weeks. This is 52 weeks. So he was right.
Then I started thinking about a lot of parents here in the United States because I know this will be listened to worldwide. A lot of parents get into these, a state funded college plans and I remember looking at these when I, when my first son was born and it was some, I don't want to say astronomical number, but it was like invest $350 a month until the child is 18 and your college plan is paid for if you started from birth. I was like, that's a lot of money. When you did the math, it was, I dunno, 60 some thousand dollars I think, which projected out over 20 years. The cost of college would be the $200,000 for a kid to go to college based on inflation and things. And uh, and then then they said, if you're a child decided not to go to college, this is what blew my brain. There is no penalty. You can get the money back. Every dime that you invested, you could get all of it back. You don't get the interest, you just get the money. I was like, that, that's not fair because they're probably big bank. They're investing it at minimum, right? Whether that's through credit cards, whether that's through home loans, through they're probably getting at least a 10 to 15 percent return on your money and when you is going to get intense. I don't want to get too intense.
Look up. One of the most Albert Einstein said, this is the eighth wonder of the world. One of the most fascinating things he ever discovered. It's the the compound interest. So if you were to just compound those $10 that this gentleman said, I could probably put it on an amortization chart, that $10,000 would be more like 60 or $70,000. If he were to actually save and earn a decent rate of return, $10 a week from birth to then he probably get about 60 grand. Way better than a $10,000. If your child this side, if you were to do a prepaid college plan versus your own investing in guys, ladies, parents, paypal, this is the most simple thing to, but the problem is there's no structure. You have to rely on your own discipline and that's why many people don't do it. When you pay into a college plan and that bill comes every month and if you don't pay it, there's some type of penalty and there's, there's pain. People will go out of their way to pay that $350 a month, but the pleasure of having that discipline long term, that's 350 a week, that's $60,000 could turn into three or $400,000 and if your child decides not to go to school, you can either give them the account, which you probably wouldn't do it if they're not going to go to school.
Buy a small portion of the company
You can invest the account yourself. You can. There's so much you can do with $400,000 if you were going to invest in a prepaid college plan anyway, but most people don't understand compound interest, don't understand investing and listen, I don't know Jack about parents, but I'm going to tell you this right now. I know little bit about numbers and the numbers don't lie. If you can invest in the market yourself, if you get the best in the market yourself and just buy high end stocks that are going to return over the years at nine percent interest and you could invest at three $50 a month, oh, you will not regret that decision moving forward. For the gentleman who was talking about $10 a month or $10 a week, $40 a month, you will not regret the decision. If you were to buy some stocks and whatever market you're comfortable buying stocks in. Now, if you're not comfortable in the market, no, it's real simple. All the stock is you buy a small portion of the company, so you are an owner of a company and if the companies are doing extremely well, I'm not gonna make any stock tips on here, but you guys know the big boys. If the companies worldwide are doing really well and it's a worldwide brand and they're helping people or they're serving people's needs and they've been doing it either for a long time or you could foreseeably see them doing it for a long time in the future.
Just buy those stocks and let it ride and you will be way better off than a prepaid college plan or if you do have the discipline to do $10 a week, if that's what you can do, don't just put it in a savings account. Buy Shares of stocks. Most millionaires and most millionaires are or everyday people have. You used this strategy to become millionaires. It takes a couple of ingredients, a plan, and a desire and the discipline to do it consistently. I don't know Jack about parenting, but I know a little bit about numbers and those numbers will serve. You will see in the next episode of, I don't know, Jack about parenting.
About the Author
Ryan Roy is the father of two boys and on a mission to be the dad he wished he had... and to help other fathers be the best they can be too.
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