Top o’ the Mornin’ to Ya!
Baby Step Five is saving for your kids’ college education. This comes after you’ve built up your 3-6 month emergency fund in Baby Step 3 and started investing 15% of your income for retirement in Baby Step 4.
As a father of five, I’ve been thinking a lot about college lately. We’re currently helping to pay for our daughter’s community college using the money we saved in 529 plans when she was younger. I’m a big fan of starting at a lower-cost school and then transferring to a university after a couple years.
However, I’m also realizing that college may not be the best path for everyone. There’s no shame in pursuing a trade or starting a business instead. In fact, I’m encouraging our younger kids (ages 8-17) to explore entrepreneurship now, so they can start generating their own income streams before graduating high school.
The key is helping them understand how to create value in the world. Whether it’s starting a dog washing business using the equipment we already have at home, or building a following on YouTube, I want them to develop skills and experience that will serve them well in any career path.
I’m reminded of a high school friend who started a lawn care business and was hiring employees by age 18. That’s the difference between owning a job and owning a business! Or the 17-year-old from the “Sailing Zatara” YouTube channel who now makes $30K a year from his own sailing/van life videos.
At the end of the day, Baby Step 5 is about being intentional with how you support your kids’ future. Save what you can, but also equip them with the mindset and skills to succeed with or without a degree. And remember, it’s all part of being wise stewards of the resources God has entrusted to us!
Here’s a quick overview of the seven baby steps:
1. Save $1,000 for a starter emergency fund
2. Pay off all debt (except the house) using the debt snowball method
3. Save 3-6 months of expenses in a full emergency fund
4. Invest 15% of household income into retirement
5. Fund kids’ college education
6. Pay off the home mortgage
7. Build wealth and give generously
You be blessed!
Financial Peace – Baby Step 5: Fund Kids’ College Education
