For the past seven years, like a lot of working families, we have been paying at least $600/month for preschool and/or childcare. And now, as this school year is rapidly coming to a close, I am faced with the exciting fact that in 4 short months I will no longer be paying any preschool/childcare fees!!! It’s like free money in my pocket!!! Granted, I know not everyone pays as much (or as little as me) but I know that these expenses are a reality for a LOT of families. And while I am certain that as the kids get older they will accumulate additional monthly expenses (dance, sports, clothes, technology, etc, etc) I am crossing my fingers it won’t be all $600 of that!
All of this brings me to a confession: We don’t have a college savings account for our kids. Why? For a couple reasons.
Did I mention the $600+ we have been paying monthly for the past seven years?
I feel pretty strongly about not pushing all kids to go to college and haven’t taken the time to look into other non-college-savings-plans.
I just haven’t gotten around to it, because, um, life.
Soooo….now that I am going to see a few extra dollars (hopefully!!!) in our bank account each month, I wanted to be proactive about how I handled it. I found this compound interest calculator and really liked the format of it, so I started playing with some numbers. Keeping in mind that childcare was $150/week, I started with saving just $50/week. (That still gives me an extra $400+ each month for extra expenditures). I used 1% interest, because, well, let’s be real about our economy folks. So this is what I got…
In 14 years, my $50/week would turn into almost $40,000! Community college, trade school, a car, who knows?! You know what’s even more amazing… If I sucked it up and just saved an extra $15 more, making it $65/week (still leaving myself with an extra $350+ each month), this is what happens….
By going from $50/week to $65/week I just saved an extra (almost) $11,000!!!!! Even with this amount, I’m still paying $85 a week LESS than I have been for the past seven years, and by doing so I can have over $50,000 saved for anything that we could need by the time Henry is 18. Finally, I wanted to know what if I just automatically saved the entire $150/week for the next 14 years (at a sad 1% interest rate)….
The answer is, by continuing to live without the $600+ each month like we have been doing since 2010, I would have $117,000 in a bank account set aside for my kids! Furthermore, if you know your investment options and are willing to use a little riskier account with the potential for a higher return, just imagine how much you could save!