Baby Step 5: What Saving for Your Kids' College Teaches You

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The average college graduate walks away from school with a fancy diploma and $25,550 in student loan debt. Yeah, go ahead and pick yourself up off the floor. That’s a lot, and that’s just the average! If you graduated with loans, you know how it feels to drag those payments around year after year. On the flip side, if you didn’t have loans, you probably know how blessed you were to go to school debt-free.

Baby Step 5 in Financial Peace University is to save up for your kids’ college education so they can experience that second scenario: going to school debt-free. Not everyone feels like it’s their responsibility to foot the bill, though. Maybe you want your child to pay for their degree on their own. That’s your call—and it’s okay if you decide to go that route.

If you do want to pitch in for that degree, it’s time to start reading up on ESAs and 529s. But Baby Step 5 teaches you about more than tax-favored savings plans. You’ll also learn these three important lessons.

1. You learn how to multitask.

The first three Baby Steps happen one at a time. You throw all of your energy into saving your starter emergency fund, then into paying off consumer debt, then into building up 3–6 months of expenses in your full emergency fund, and then into fully funding your retirement accounts. But in Baby Step 5, you start spinning more than one plate at a time. That’s because you continue putting money away for your retirement while saving for your children’s college expenses at the same time. Yes, your money is moving in a lot of different directions. But you’re setting yourself, and the rest of your family, up for success—not just paying for the past.

2. You learn what it means to be a blessing.

When you’re paying off your debt, you’re focused on the now. Your biggest goal in the first three Baby Steps is to stop the bleeding. And in Baby Step 4, you’re taking care of your own future. But in Baby Step 5, you shift gears. You aren’t just thinking about the now, or about yourself—you’re able to think about the future, and about them. You’re breaking the cycle of debt and financial bondage by setting your children up for a lifetime of success. Your legacy is officially beginning.

3. You have a great opportunity to talk to your kids about money. 

Hopefully your kids have been watching you work through the Baby Steps. After all, more is caught than taught. But, if they’re old enough, this is your chance to sit down and teach them about budgeting, saving, and investing for the future. Talk to them about student loans, and make sure they understand that not every parent pays for college. The last thing you want is for them to feel entitled to a paid-for education. You want them to be grateful for it and understand what a blessing it is!

Think about how powerful it is to be able to help your children go to college without any debt. You’re helping them start their adult lives with the ability to save and give immediately. You’re blessing them— but you could also be starting a generational legacy!

money | @ChrisBrownOnAir