Here Is How Much You Need to Save for College
What if I told you that I knew exactly how much you needed to save for college each month from birth so that your child could go to school debt-free? What if I said the following:
We can tell you exactly how much you will need to save every month to send your child to college without saddling them with student loans. Check out this video for a full breakdown of your savings options and a case study on how much you'll need to stash away to pay for your child's college education fully.
That sounds pretty cut and dry doesn't it? Well, that was a headline of an article for a video produced by CNBC that I think sends out the wrong advice that, if taken, might be a mistake. With an implied guarantee, this writer is going to tell you exactly what to save, and it is going to work. Now the average investor/parent who hasn't been exposed to the reality of pop culture finance, would read this, take it as the gospel, and based on their case study and expertise of CNBC, think that they now have a guaranteed way to get this college thing taken care of and funded.
To be fair, CNBC didn't guarantee it would work. However, they might as well have. Here is the reality:
First, you can't magically save your way to college funding. Saving a certain amount each month does not automatically fund college. There is much more to the process. You would depend on a great deal on luck by taking this advice.
Second, you still have to invest the money, and there are no guarantees that a pandemic, bear market, financial crisis, hit at the wrong time take your college fund, and cuts it in 1/2 just when you need it.
Yes, consistently saving the amount that they suggest in the article and earning 6% creates a high probability that you would be ready for college. HOWEVER, it is just not that easy. Today (Monday) on the program, I am going to be addressing some tips for college funding and what to do if the pandemic is threatening your senior's college fund. If you can't listen to the show, go to this link for the podcast, which is posted the next day.