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#6 Baby Step 5: Save for your children’s college fund.
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Introduction:
- Welcome to "Figuring the Figures," the podcast where we break down personal finance concepts and make them easier to understand.
- Today's episode is all about Dave Ramsey's Baby Step 5, one of the most important steps in his financial plan.
- We'll be discussing what Baby Step 5 is, why it's important, and how to achieve it. So, let's get started.
Segment 1: What is Baby Step 5?
- Baby Step 5 is all about saving for your children's college education.
- Dave Ramsey recommends that parents start saving for their children's college education after they have completed the first four baby steps.
- The goal of Baby Step 5 is to ensure that your children don't start their adult lives burdened with student loan debt.
Segment 2: Why is Baby Step 5 important?
- The cost of college education has been rising steadily over the years, and it can be a significant financial burden for parents and students.
- By saving for your children's college education, you can give them a head start in their adult lives and help them avoid the stress of student loan debt.
- Baby Step 5 also helps parents to plan for the future and ensure that they have enough money to cover the cost of their children's education.
Segment 3: How can you achieve Baby Step 5?
Achieving Baby Step 5 requires careful planning and dedication to saving for your children's education. Here are some steps you can take to achieve this goal:
- Estimate the cost of your child's education: Before you start saving, it's essential to have an idea of how much money you'll need to cover the cost of your child's education. You can use online calculators or consult with a financial planner to estimate this amount.
- Set a savings goal: Based on the estimated cost of your child's education, you can set a savings goal. Dave Ramsey recommends saving for college using a 529 college savings plan or a Coverdell Education Savings Account (ESA).
- Start saving early: The earlier you start saving, the more time your money has to grow. Dave Ramsey recommends starting to save for college as soon as your child is born.
- Prioritize Baby Step 5: Saving for your child's education should be a priority after you have completed the first four baby steps. Make sure to allocate a portion of your budget towards this goal each month.
- Consider other sources of funding: While saving for your child's education is crucial, it's also essential to consider other sources of funding, such as scholarships, grants, and work-study programs.
Conclusion:
Achieving Baby Step 5 can be a significant financial milestone for parents and their children. By saving for your child's education, you can help them avoid the stress of student loan debt and give them a head start in their adult lives. Remember to plan carefully, start early, and prioritize this goal after completing the first four baby steps. Thanks for tuning in to "Figuring the Figures," and we'll see you next time.
🔗 Don't forget to SUBSCRIBE and visit ZtikMan.com for more financial insights and resources!
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Chapters
1. Timestamps (00:00:00)
2. Trailer (00:01:21)
3. Intro (00:02:20)
4. Baby Step #5: Save for your children’s college fund (00:02:40)
5. How to set up your budget for Baby Step #5 (00:03:26)
6. Why should you start saving for your kids' college expenses ASAP? (00:03:46)
7. Do this if your start up business is your baby (00:04:57)
8. Rearranging your budget for Baby Step #5 (00:05:18)
9. Dave Ramsey's College Savings Calculator (00:06:19)
10. Alternatives you can take to afford a state university (00:09:57)
11. Don't stop investing into retirement to fund a college education (00:11:52)
12. Things to expect through the years of saving for college (00:12:58)
13. Consider putting your college savings in a 529 plan (00:13:18)
14. What is a 529 plan? (00:13:37)
15. What is the average rate of return on a 529 plan? (00:14:35)
16. Calculating 13 years of investing $360/month into a 529 plan (00:15:04)
17. What you should know from seeking a financial coach to a financial advisor (00:16:38)
18. Financial Coach VS. Financial Advisor (00:18:07)
19. What if you don't have a child? (00:18:45)
20. I understand all of this can be frustrating at first (00:20:05)
21. Closing Statements (00:22:07)
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