Friday, January 20, 2012

Saving Money for the Future: Can't vs. Won't

It was several years ago when a relative of mine made an odd statement, one that has rattled around in my head  ever since.  "I don't understand, we are wealthy by most standards, but we just can't save for college."  It was one of the moments where I was puzzled at first, and then decided it was not a conversation I wanted to explore. Why?  I would challenge her on the word can't.  I'd offer that she won't save for college.  There is a difference, a big difference.

College savings is a sensitive issue for me.  I am a huge proponent of saving for college.  Within 24 hours of receiving the Social Security Number in the mail, both of my children had 529 plans set up.  For those who do not have young children or haven't set up an account, a 529 is like an IRA, but for college.  Money going in gives you a tax break, it grows tax free, and so long as it is used for "college" it comes out tax free.  529s -- I studied those more than any other baby gadget item or accessory.  Why?  Paying for college is very, very important to me. Even if it is not something important to you, this post can be applied to any number of financial goals -- paying off the mortgage early, saving for retirement, etc.

It all started on a fall day in September of 1973.  My mother held her newborn daughter in her arms and said "you are going to the University of Wisconsin."  She herself had finished high school, my father, a trades program.  Higher education was not something common in my family tree.  Seventeen years later I moved into the dorms and began a nine year odyssey through higher education.  I left with a B.A., a Masters in Public Administration, a law degree, and $97,000 in student loans.  Throughout those years I worked various jobs, sometimes more than one at a time, to keep the debt as low as possible.  When I sent in my final student loan payment I vowed that my children (should I ever have them) would never be saddled with that much debt.  It limited my career choices far too much!

When people here I am a lawyer with a solo practice they wrongly assume that my father had been an attorney, and I am following in his footsteps.  No he wasn't an attorney.  First he worked in construction, and then after an injury eked out a living as a used car dealer.  My mother cared for other children in our home until I was about 12, and then she took a job in a plastics factory.  There were some lean years, sometimes we lived at the federal poverty level.  I appreciate the role model my parents set of running your own business and working long hours. But, like my relative above, they often said "we couldn't save for college."  

In fact they could have saved for college.  At age 5 I had a princess canopy bed with two matching dressers.  I didn't ask for them, my parents thought they were nice.  Over the next five or six years each Christmas and Birthday brought an infusion of the latest Barbie merchandise -- my mother insisted I have them: the  mansion, corvette, store, camper, styling head, two Barbies (Ken and Skipper), even the damn dog.  The stuff was eventually placed in the den closet where it sat until I sold it in 2005, on Ebay, putting the proceeds towards my student loan debt.  In reality my parents chose not to save for college.  Instead, they chose to purchase consumer products.  They also chose things that they enjoyed.  I won't deny them the right to enjoy t-bone steaks every week, or cigarettes, or lottery tickets.  I will, however, deny them the ability to claim they simply could not save for college.  Am I too harsh?  Possibly, but sometimes recognizing the truth is harsh.  

Whenever I see a headline declaring "Jury Finds So-and-So Innocent" I cringe.  The person was found "not guilty", innocent is not the same thing.  The same goes for hearing people say "I can't save for retirement".  Really?  How about you?  Are you claiming that you cannot save for something?  In some cases that may be very true.  However, it may also be that you value something else more than what you would like to save for, but haven't.  Living frugally allows people to have more money to put towards savings.  But it helps to know what your true priorities are.

Please come back Monday when I'll have a much lighter post -- my recipe for homemade granola.  Enjoy your weekend dear readers!

1 comment:

  1. We have made different choices about the college question. JJ and I paid nearly our entire way through school(s), and yes, this means we had (still have in my case) related debt. However, we both feel that paying our own way made us learn to work hard and own the experience of college, we owned the full experience and didn't want to waste it (no rebelling necessary). With our own kids we have consciously decided that we will not fund their entire experience, we save according to that principle. We won't saddle them with full debt, but they will be expected to own their own part of the process financially. Just another perspective on the topic.