Getting Your Children to go to College

William Elliott III, Ph.D., a professor at the University of Kansas recently published findings that "kids with a savings account in their own name are six times more likely to attend college than those without an account."

Dr. Elliott continued, "It's helping them to be thinking of college, to have it on their mind in a more concrete way than simply saying, 'I expect to go to college.  They've taken some actions, they've got a savings account, they're saving some money.  Positive expectations aren't quite enough."

Would these conclusions have been true for you or your children??

Automate Your Savings (Carole)

You've probably heard the oft-repeated phrase, "Pay Yourself First."  These just might be the most important words in the English language when it comes to your financial health.  If it's all you can do to pay the mortgage, utilities, groceries, car payment and insurance and you are not putting money aside in some kind of savings vehicle on a very regular basis, then you will never get ahead financially.

The only way to long term financial stability is to put money away somewhere for the future.  You can call this savings account whatever you want:  Emergency Fund, Rainy Day Money, Retirement. . .  Guaranteed the day will come when you will be glad it's there waiting.

If a personal savings plan (in addition to a 401k or IRA) is not part of your current budget and seems absolutely impossible, take heart.  Everyone feels this way!  It almost doesn't matter how much money you earn, you can easily spend it all.  We've all learned that if you make more money, then your bills automatically go up by at least that same amount.  I think it's one of Murphy's Laws.

To stem this tide, you need to set your personal savings plan like any other BILL THAT MUST BE PAID.  Pay yourself -- every month, or every paycheck.  My husband often tells of our first experience with this.  We decided (after being married for many years) to have $100 electronically removed from our checking account every month and put into a money market account.  We both almost hyperventilated after setting it up!  Could we really afford this???  Would we have to transfer it right back within seconds of having it taken out?  Maybe you feel those same fears.

But guess what?  The $100 came out the next month and we still paid all of our bills.  Whew.  And it happened again the next month and the next month.  It was magical.  And easy.  Unbelievably, we didn't really miss it.  Most budgets (even tight ones) have more wiggle room than you think.

After a few months, we sucked in our breath again and increased the amount to $200.  Same thing.  We didn't miss it.  But we did love watching that money market account grow bit by bit each month.  That gave us some serious endorphins to keep going.

After a year, we decided to really ramp things up and increased our auto-withdrawal amount to $1000!  Surely this would kill us.  But it didn't.  We survived and paid all our bills.

Start small.  But start.  I'm not saying you need to do the same amounts we did, but try something.  Call your bank or get online and set yourself up for an automatic withdrawal to some kind of safe savings vehicle (CD, money market, savings account. . .) and watch your stress level go down as your personal savings goes up.

This is what's called "Getting Ahead."

Naming Your Accounts (Janssen)

Dave Ramsey likes to say, when talking about budgeting, "Tell your money where to go." We try to make this happen in our family budget, but sometimes it's difficult when money is being saved up for various future expenditures (say, a twice-yearly bill or a vacation or a large purchase) instead of being spent by the end of the month.

To combat this slushfund approach, where your money being saved for various expenses is all mixing together, untitled, in your checking account, Bart and I have a whole host of savings accounts. We use ING Direct and it's incredibly easy (and free) to open as many savings accounts as you'd like. You can name them whatever you choose and there is no fee to transfer money between various accounts.

For instance, we currently have an account called "Student Loans." When we get extra money or deposit a check, we put that money directly into the Student Loan fund, where it sits for a week or two until our next paycheck and then we pay the total amount toward our student loans. There's no temptation to accidentally spend the $85 check we'd said was for the student loans, because it's not in our checking account.

Likewise, our fifth anniversary is coming up this summer, and we wanted to do something great. About a year ago, we opened an account called "5th Anniversary" and started putting money towards it. All our graduation gift money went into that account and when plane tickets went on sale earlier this year, the money was right there ready to be spend (and to help us determine how much we could afford). The money hadn't been washed away in electric bills or fast food or an impulse pair of shoes.

Putting a name on our money, having it in a dedicated, specific location, makes budgeting and saving considerably easier for us.

Any one else use multiple accounts this way?