Cover art for podcast Radical Personal Finance

Radical Personal Finance

978 EpisodesProduced by Joshua SheatsWebsite

Joshua J Sheats, MSFS, CFP, CLU, ChFC, CASL, CAP, RHU, REBC is a financial planner who teaches people how to live a rich life now while building a plan for financial freedom in 10 years or less. He mixes creative approaches to lifestyle design, deep-dive financial planning techniques, and hard-core … read more

1:08:19

How to Calculate How Much You Need to Save For Your Kid's College RPF0101

Planning for a child's college expenses is a major financial goal for many parents. Unfortunately, this is an area filled with conflicting advice. 

Some people feel that saving for college is a financial goal of utmost importance; others feel it's not worth the money. Many that desire to save for the goal get constantly conflicting advice on whether to do a pre-paid tuition plan, 529 college savings plan, EE education bonds, cash value life insurance policy, or any of a couple other dozen exotic ways to plan for this expense.

Today, we continue our college series by teaching how to do a calculation of the need. I teach you how to use a simple financial calculator and paper and pen and come up with a precise dollar amount to save for.

Enjoy!

Joshua

Links:

How to manually do the math for the college need on a financial calculator:

Step 1: Calculate the cost of the first year of college with a simple future value (FV) calculation.

PV = -$20,550 (cost of college today)n = 17 (years between today and first year of college)i = 6% (rate of inflation of college tuition)PMT = 0solve for FVFV = $55,336.48 (cost of college in the first year)

Step 2: Calculate how much money you need to have available when your child is in their first year of college.

PMT = $-55,336.48 (cost of college each year)n = 4 (four years of school attendance)i = 1.89% (inflation-adjusted return: [(1.08 / 1.06)-1] x 100 = 1.89%FV = 0solve for PV (make sure your calculator is in BEGIN mode)PV = $215,262.97 (amount needed in first year for four years' tuition)

Step 3: Calculate how much the parents need to save in either a lump sum (PV) or yearly amount (PMT) or monthly amount (PMT-convert i and n to monthly amounts).

LUMP SUM VERSIONFV = $215,262.97 (amount needed in first year for four years' tuition)n = 17 (years between today and first year of college)i = 8% (rate of return of investment portfolio)PMT = 0solve for PV (if you want a lump sum)PV = $-58,178.90 (lump sum amount needed today to fund the cost)

YEARLY SAVINGS VERSIONFV = $215,262,97 (amount needed in first year for four years' tuition)n = 17 (years between today and first year of college)i = 8% (rate of return of investment portfolio)PV = 0 (current amount of savings)solve for PMT (if you want yearly payment amounts...look for info in a case scenario on whether to use BEGIN mode or END mode)PMT = $-5,905.67 (yearly amount needed to fund the cost)

Educational emoji reaction

Educational

Interesting emoji reaction

Interesting

Funny emoji reaction

Funny

Agree emoji reaction

Agree

Love emoji reaction

Love

Wow emoji reaction

Wow

Are you the creator of this podcast?

Verify your account

and pick the featured episodes for your show.

Listen to Radical Personal Finance

RadioPublic

A free podcast app for iPhone and Android

  • User-created playlists and collections
  • Download episodes while on WiFi to listen without using mobile data
  • Stream podcast episodes without waiting for a download
  • Queue episodes to create a personal continuous playlist
RadioPublic on iOS and Android
Or by RSS
RSS feed
https://radicalpersonalfinance.libsyn.com/rss

Connect with listeners

Podcasters use the RadioPublic listener relationship platform to build lasting connections with fans

Yes, let's begin connecting
Browser window

Find new listeners

  • A dedicated website for your podcast
  • Web embed players designed to convert visitors to listeners in the RadioPublic apps for iPhone and Android
Clicking mouse cursor

Understand your audience

  • Capture listener activity with affinity scores
  • Measure your promotional campaigns and integrate with Google and Facebook analytics
Graph of increasing value

Engage your fanbase

  • Deliver timely Calls To Action, including email acquistion for your mailing list
  • Share exactly the right moment in an episode via text, email, and social media
Icon of cellphone with money

Make money

  • Tip and transfer funds directly to podcastsers
  • Earn money for qualified plays in the RadioPublic apps with Paid Listens