What Type of Saver Are You?

Photo credit: Microsoft Office, Clip Art

Are you worried about saving money to put your children through college? Have you started to save?

I started saving for my children’s college tuition before I was finished with the first trimester of my first pregnancy. My goal is to put my children through college without any of them having to take on student loans. I am very much aware that this is a hefty goal, but this is what my parents did for me and this is what I would like to do for my children.

Since having children I have discovered that there are lots of different approaches to college savings. I have discovered something even more interesting than the actual savings. The discussion of college savings and long-term financial goals seems to be an interesting and controversial topic of discussion amongst parents. I have found that there are four primary groups that parents tend to fall into:

(1) The parents who do not speak about money. Who knows if they are saving or what they are doing to save, these are the people who clearly live by the rule you don’t mix money and friendship. Now, if they were only as willing to keep their political ideals equally quiet, summertime picnics would be much more enjoyable.

(2) The modest and creative savers and planners. These parents have started saving for their children to attend college, some have savings accounts, some establish 529 plans, others have long-term CDs or bonds. These parents usually enjoy talking about the instruments that they are using to save, and how their investments are doing. This group tends to be divided into two subgroups: (A) the parents who realize they will never save enough to cover all the tuition their children accumulate, yet they continue to be proactive savers in an attempt to help their children to the best of their ability, and (B) the parents who are committed to paying the way for their children, even if their 529 plans fall short, they would take on loans for their children or come up with other creative means like refinancing their home.

(3) The aggressive savers. These parents are in it to win it! They dabble in mutual funds, stocks, and sock away money into a variety of different products almost as compulsively as my Mimi use to stash cash in the freezer. This group of parents usually offers advice, they are willing to talk actual dollar amounts and will look at you with horror if you do not have a long-term plan for paying for your three-year old’s law school tab.

(4) The non-savers. I have encountered and been privy to many conversations in which parents openly admit that they have no intention to save for their children’s college tuition. These parents believe in living in the moment and will spend their extra cash on trips to Disney, to the islands, new cars, home improvements, and any item that will buy them more happiness in the present.

The interaction between the four sub groups of parents makes for interesting dialogue. It could be an anthropological study in itself. Non-savers tend to clash most heavily with aggressive savers. The two subgroups of modest and creative savers can argue the pros and cons of fully  picking up the tab versus the partial pick up. The parents who do not speak about money can make everyone paranoid. Ultimately, at the end of the day, I find that talking about saving for college is dry and tiresome. While I do appreciate the wisdom and bits of insider information that I get from the aggressive savers, and I can admire the live-in-the-moment mentality of the non-savers, I have found that the discussion of college savings, like many other parental interactions is about letting others know where you stand in the world financially and how far ahead (or in some cases behind) you are of your peers.

While I continue to save for my children, and listen to others talk about saving (or not saving) for theirs, there is one cold hard fact that I remind myself of. In the 2013 publication of “How America Saves for College 2013” the average family plans on saving $38,953 per child, which represents only approximately 32 percent of the actual cost of college. In the end, the average family actually ends up saving $19,784, only about half of what they actually intended to save. I guess I had better empty out my Nordstrom shopping cart and make a contribution to my 529, I have got my work cut out for me.

15 comments on “What Type of Saver Are You?”

  1. I love this post. You describe the different groups of savers so well. I’d say I’m closest to the “modest and creative savers and planners.” I also expect my kids to help with their tuition with scholarships, part-time jobs, etc.

    I’m motivated to help my children avoid student loans. That’s why we are looking for free college money, early and often. There are scholarships out there for kids as young as kindergarten. I actually wrote a related post today.

  2. I paid my own way through college, with the assistance of scholarships and student loans. It wasn’t that my parents didn’t want to pay, or at least help pay, but they were simply unable to do so. Well, I guess “unable” is always subject to interpretation. Maybe it’s more a matter of thinking things though and making wise financial decisions earlier in life. But I know they didn’t plan for me to turn 18 and have no money saved for me — they just spent most of their lives dealing with a lack of resources and the constant struggle to meet current expenses, let alone save money for any purpose. For example, they filed for their second (third?) bankruptcy my junior year of college, and lost their house in that process. My liberal arts college classmates couldn’t even conceive of this being a possibility in their worlds. So anyway, my experience was difficult, but not insurmountable, and I like to think that because I was raised to be industrious and seek out opportunity, rather than by way of sheer luck, I was able to find a way to make ends meet while putting myself through my very expensive college. The way I did it was by finding a “part-time” job that often reached up to 40 hours a week waiting tables, and paying my rent, etc. out of my tips.

    I would submit that the idea that parents can, or even should, pay for their children to attend college is a relatively modern, somewhat uniquely American concept that is worth reconsidering. Due to my own experience, I formed the firm belief that my kids would do the same: pay their own way through college, whether through scholarships, hard work, or a combination of both. As far as I could tell, when I turned 18, I was an adult and it was my responsibility, not my parents’, to take care of myself. I keep hearing about parents of teenaged or college-aged children who spent all their savings on their kids’ education, without saving anything for their own retirement. I would rather find a way to ensure that my kids won’t be saddled with taking care of me in my old age, than put all my money toward their education, which quite arguably is their job, since it’s their lives and their own careers we’re talking about after all. I also believe that when you’re working hard to pay for college yourself, you simply appreciate it more, and take it more seriously — I know I did. I was one of the first members of my family, at least on my Dad’s side, to earn a college degree, and it was an amazing feeling.

    However, now that I have kids of my own, I am finding that my views on this topic have softened somewhat. I certainly don’t want my girls to work in a restaurant and be subjected to sexual harassment from the cooks and the temper tantrums of impatient customers, like I was. I learned a lot and built quite a bit of character from the experience, but yeah … there are better ways to do that for your kids. So I will try to set aside a bit of cash for my kids’ education — with the understanding that I am doing so out of love, as a gift, and not as an entitlement, and that if there is a shortfall anywhere, they will be smart and savvy enough to find a way to make up the difference.

    1. Thank you for this thoughful comment Melanie. I agree, I think when college students feel ownership and responsibility for their education, they are more likely to take it seriously. That being said, I’m conflicted over providing for my children and having them grow up to feel entitled, or burdening them with financial responsiblity at a time in their life when they should be able to be carefree and enjoy their situation. I think like everything else, it’s about balance. I also believe strongly in kids having a job. I have had a job since I was 14 and I will expect the same of my girls, I think it promotes hard work, responsibility and builds character at an early age. Thank you for sharing your experiences, and seriously, how awesome of you to take the time to write such a thoughful comment!

      1. Thanks. On a second reading, I hope the use of the word “entitlement” didn’t offend anyone. It’s kind of a loaded term, and I meant it more in the sense of an expectation. I went to college with kids who grew up expecting that their parents would take care of them well into adulthood, for one reason or another. But as you point out, it’s also a good thing to not want our kids to be saddled with so much financial strain early in life that independent adulthood is a non-starter. Having a job is also important. I hope my kids can have something more along the lines of an internship that could be a springboard for a career, or a public interest type gig where they get to work with underprivileged people, while also learning the value of a dollar earned.

  3. Interesting post that I’m sure resonates with every parent. The difference in the “saver types” is precisely why I NEVER discuss financials and savings plans with others – particularly our (hubby’s and my) siblings who are a little more carefree with their money than we are. I think the reality is that if your child wants an education, they (or you) will find a way to finance it – it may not be pretty and it may not be easy, but I guess that’s life.

  4. You are lucky that there is an increasing trend towards “value” schools, as opposed to prestige schools. People are getting it that state universities and community colleges are a great bargain. But of course you want your child to be happy. My theory is that the college years are such a fantastic time (living on your own with people your own age, but not responsible for making a living) that almost any one will do.

    I was a non-saver in the Christa mode, sort of: absence of resources to save with, but the truth is that I am a very bad saver anyway. My kids got financial aid (some grants, LOTS of loans). One of them went to a private college which was quite expensive, especially because he needed an extra year to get to the finish line. The other tried a private university which was not for him (I knew this but he had to find out for himself) and then returned to the good old Connecticut state university system. He too had some bonus years before getting his degree, but at least they were under $20K/year.

    What I ended up doing was splitting the loan payments with each kid. I feel sad that they have to pay, but that’s a very weird reaction, because I had to pay back my own student loans. Somehow I got through college and law school without my parents contributing anything. I desperately wanted independence from their controlling purse strings, and it was worth it, even if the loan payments were the same amount as my mortgage was back then! And my current student loan payments for the offspring are pretty massive also. I try not to think about the zillions of dollars I have spent on educating my children (who both went to private elementary school — a story for another day). At least they have great careers, without needing an advanced degree.

    Good luck with this challenge!

    1. I just sat in a meeting this afternoon and discussed the trend toward reliance on state schools and community colleges and how valuable they are to many, many families. It sounds like you provided your children with a great deal of support, and how fabulous of you to split their student loan payments! Currently, my day care payments are equal to my mortgage, so at least if I have to take on student loans for my children later in life, I will know what to expect 🙂 Thanks for your thoughtful comments!

  5. What I find intriguing about this concept is that I think a person’s savings type is in many ways based upon how their parents treated college savings. My parents contributed to my college tuition but I graduated with loans (since paid off–yay!). My husband’s parents paid for his schooling (and his sister’s). I am of the belief that some loans will be okay (though we have 529s for each of our kids) while he wants to try to pay for their college (which in light if cost projections, I just don’t see that happening). And, as I keep reminding him, one can always borrow for college–but not for retirement.

    1. You are right on Patti! I was actually thinking of including a paragraph in the original post about the relationship between how your parents saved for your college experience and how that influences what you will do for your children. It’s an interesting dynamic. Great point about the college-retirement dichotomy. Thank you for your comment.

  6. I’d add that there is another group – the non-savers who would save if they could, but don’t have the resources to.

    I fall somewhere in between a couple of the groups. I have money set aside that family has given her for her birthday, etc. that is earmarked for a 529 account, but I have yet to actually open said account. I have the paperwork and all, I just haven’t done it yet. Just like those photo albums I’ve been planning on doing.

    That said, while I intend to put some money away for my daughter’s education, I don’t for a second think it’s realistic that we’ll be able to cover the whole thing. I’m assuming she’ll have her fair share of student loans, just as I did, and I’m fine with that.

    1. I think you make a valid point about parents who do not have the resources to save. However, sometimes parents think they need a substantial amount of money, or a dedicated stream of revenue to save for college, so they put it off and wait. Little amounts add up. I once calculated how much I could save for my children’s college fund if I skipped my morning trip to Dunkin Donuts. Every little bit helps. I’m right with you on the photo album debacle. Thanks!

  7. Love this…my husband and I are putting some money aside for the kids, but I dought will have enough to cover all their education costs. We paid for our education on our own and feel that our kids will be able to do the same.

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