NCN has posted a list of questions he has about money (he is one of the original PF blogger gurus, so it’s reassuring to know that even he still has unanswered questions). I found myself asking the same questions on number 1 (what’s in your retirement account) and number 2 (saving for college). My IRA and 457 plan are a mix of ETFs, index funds, one bond fund and one stock (GE). Do I have the right mix is anybody’s guess. My bond fund is only about $200 out of a $22,000 portfolio, so it’s not much of a concern. I have about $1800 worth of GE… I bought it because a couple years ago, when it was a “stock to buy now” in both Money and Smart Money magazine. Dumb reason, I know, but that’s why I have it. It hasn’t done much since I’ve had it, although it is worth more than it was when I bought it. I have about $15k in ETFs, and the rest is in index funds. I’m 28, and most of what I have is reasonably high-risk, high return stuff. I feel ok about what I have, but I also feel unsure – I know that there’s so much I don’t know about investing, and I wonder if I’m missing the boat somewhere.
Question number 2… We don’t have children yet, but I have been reading about 529 plans and various ways of saving for college… I’m not sure yet what we will do. One thought that I already have on that subject is that children should be responsible for some part of their college costs. My parents helped me open a savings account when I was about 5. All the money in the account came from doing chores around the house, and birthday money from my grandmothers – and I always knew that the money was “for college.” That savings account was like a roach motel. Money could go in, but it could not come out. I applied for every scholarship available when I was a senior in high school. I ended up getting enough to cover tuition and fees at a good state university, with a little extra for room and board. My parents helped me with a good chunk of the remaining room and board while I lived in the dorm, and then I paid my own rent and groceries once I moved into an apartment. I worked part time in college, which I would strongly recommend for my own children. I knew people whose parents paid for everything – tuition, rent, groceries, car insurance, books, gym membership, beer money… I was never very impressed with those people. They had an air of entitlement about them that I found unappealing. It’s one thing to have help from your parents. It’s another thing entirely to be a total mooch. So while we will start some sort of college savings plan as soon as we have a child, we will not plan to cover the entire cost of college and everything that goes along with it.
Chris says
I have to agree on you about the college funding. I got my first job in high school; worked all the way through college (UCSD); lived at home in order to further reduce the financial burden and helped pay my ‘first two senior years abroad’ in China. I had a great time, even if I didn’t get the freshman ‘dorm’ experience, and I learned how to manage my finances responsibly.
Mind you, my parents did pay my actual registration fees (no tuition for state residents), which were probably less than $3000 a year 20 years ago, but I bought my own books and would have had to pay my own rent if I chose to live in a dorm or rent an apartment. Uh, no thanks! Getting to China was more important to me than living with my peers.
It took me 6 years, counting the years in China, but I graduated with honors and a strong work ethic. My frugal Chinese husband and I are debt-free with the exception of our mortgage which we will pay off many years early, and we intend to raise our only daughter to value thrift and manage money wisely as well.
Rich Minx says
My parents helped me fund my way through college, but I worked to make up the rest. I had part time jobs and summer jobs to make ends meet. Even though the ‘student’ jobs weren’t always a bunch of fun (anyone who’s worked in retail will know what I mean), they gave me valuable skills which still come in handy, like customer service and marketing.