Wednesday, January 9, 2019


I got my degree of Bachelor of Science in Information and Computer Science in St. Paul College Manila (it's currently renamed to St. Paul University). It's a 4 1/2 years course. The 1/2 is because of the additional courses/OJT we need to take during summer and some Saturdays (Paulthenics anyone?). 

My husband got his Bachelor's degree (major in Physics and minor in Economics) in New York University.

With this background information, it's sort of a given that we want our kids to go to college as well (if they want to, hopefully they do) and that's when this story about 529 comes in.

We started saving money, every payday (which is 2x a month) for Keith's college fund when he was still in my tummy. The husband and I agreed on a certain amount that we set aside every payday and put it in a Savings Account. When I was pregnant with Priya, we did the same thing. We also started saving for her college fund while she's still in my tummy. That means the money we need to set aside for college fund doubled because we now have 2 kids to save for (we set aside the same amount, every payday, for both kids).

image from google

Then, last year, 2018, we decided we have saved enough to open a 529 (thru Vanguard).

So what is 529?  It's a college savings fund. It’s a tax-advantaged investment account that works like a Roth IRA, offering tax-free growth and tax-free withdrawals (also see: 5 Reasons to Start a 529 Plan). Want an example? Here's an excerpt from how-much-to-save-for-your-childs-college/ :|
"If you have a 4-year-old child targeting a private university, your monthly savings goal might be $700/month using a savings account versus $400/month with a 529 college savings plan. That’s a big difference!"

image from

Keith is 3 years old now, Priya is 1. I know what you're thinking (at least for some of you). You're thinking we're overthinking stuff. That we have more than enough time to save since it's not until they're 18 until they go to college. Unfortunately, that is not the case. Based on what I read, the formula for making sure you're in track for this college fund savings  is your child's age multiplied by $2,000 (age x 2,000). This is to cover for half the average cost of a four-year, public university (source: use-this-rule-to-save-for-your-kids-college-education). HALF. in-state PUBLIC university. Which means, if you want to shoulder the FULL amount, it should be your child's age multiplied by $4,000. If you want full and private school, then age x 8,000(?).

Let's do some multiplication and "dibay-dibay". Say, I want to just shoulder half the tuition fee, for public school. My son's age is 3. Based on the formula above, that's:
3 * $2,000, equals, $6,000.

I should have $6,000 in the bank right now to consider myself still on track. But how do I make sure I'll be in track until he's 18? Again, based on the formula <age> * $2,000, that will be:

18 * $2,000 = $36,000.

So how much do we need to save per year?

$36,000/18years = $2,000/year.

How much to save per month?

$2,000/12 months = $166/month.

Between the hubby and i, we can contribute $83/month or $41.50 per payday (bi-weekly). Not bad, right?


You need to factor in the inflation rate!

According to
"The bad news is that college costs are expected to double again over the next 10 years"

In our case, we are talking about two 10 years (2025-he'll be 10 years old and 2035-he'll be 20). Which means, we need to save for 108,000. That's $36,000 x 3 (why 3? 1 is for now, +1 is for year 2025, +1 is for 2035 ). Which means:

18 * $2,000 = $36,000 x 3 = 108,000
108,000/ 18 years = $6,000/year
$6,000/12 months= $500/month
$500/2 (me and hubby) = $250 each per month or $125/payday

Again, that's saving for HALF the tuition fee for IN-STATE,  PUBLIC university (see: List of Public Colleges in Pennsylvania).

But there's still light at the end of the tunnel.

They said shoot for 1/3, not the full amount. The remaining two-thirds can be filled in by scholarships, financial aid and current income (*fingers crossed* that we're still alive). Having said that, we're back to the first computation (before the inflation rate). Which is $41.50/paycheck. But it doesn't hurt to plan for the worst, right? Like, what if the school he/she wants doesn't offer scholarship? Or he/she's not good at any sports to be eligible for scholarship? What if, *knock on wood*, we're no longer in this world to help them on the remaining 2/3? So many scenarios to consider.

Anyway, whatever we ended up saving, our goal is to somehow help them. I mean, hey, better than nothing, right? I'm sure my kids would appreciate a $n student loan instead of $n * 2 , right?


Besides, if all else fail, there's the Philippines. Or Canada (I heard it's cheaper to go to college in Canada vs U.S.)

Oh! don't forget that we, parents, also need to save for "our" future. You know, "assisted living", hospital bills, 401K contributions. So yeah, we'll just do whatever is financially possible that would take care of  "both" sides.


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