America Saves Week: Education

This week (2/22-3/1) is America Saves Week,
coordinated by the America Saves campaign and by the American Savings
Education Council, who are working with a large coalition to promote
the savings message and foster better savings behavior.

My next few posts will focus on saving on the BIG things that can
make an appreciable difference in lifestyle.  I consider myself fairly
frugal with everyday purchases like clothes or groceries, but this is
about "shopping" on a much larger scale, resulting in savings of
thousands of dollars.

The topic for today:  education.

This
recent article in the NY Times just made me laugh--  $500k in Manhattan
is the equivalent of barely scraping by?  Well, the lifestyles profiled
in the article include thrice-weekly personal trainers, luxurious
vacations, private school tuition, etc.  It's no wonder $500k after
taxes goes through their fingers like water!  Here are a few of my
thoughts on how they could save at least $100,000 on education alone.

I'd like to point out that the article assumes that the earner is
male, and the $500k-limited salary is the sole contribution to the
household.  Otherwise, the article would be evaluating budgets of
couples who pull in 7 figures combined.  With that in mind, I've rolled
with those assumptions.

The article cited the following annual costs:

30 weeks of regular tutoring: $3,750

Two children in private school: $64,000

Nanny: $45,000

The above annual costs can be eliminated entirely-- and fairly easily.

First, the smaller expenses.  What is the stay-at-home parent
doing?  If the household has the luxury of subsisting on a single
income, then the non-working parent can contribute by taking care of
the children, managing their education, etc.  That eliminates the nanny
and tutoring expenditures-- almost $50,000 in immediate savings.  Plus,
think about the intangible benefits of having an actively engaged
parent at home!

Now for the big one:  Private school?  For 12 years?  The easy way
out is to switch to public school, but for those who want to keep their
kids in private school, it's definitely possible.

I've never attended anything else. Here's how my parents avoided
paying through the nose:  they invested wisely in my education during
my early years, and taught me how to think for myself.  In elementary
school, I had the benefit of having my mother at home.  While my
parents did pay tuition (well under $10,00 annually) for 9 years of
elementary school, I attended smaller, less hyped (and less expensive)
schools that didn't have pools and glistening gyms, but instead focused
on doing a few things well, like music and foreign language.  That set
the tone for the rest of my academic career-- somewhat unconventional,
but with considerable added value.  Choosing a less expensive private
school can net a family significant savings, if they don't focus on
keeping up appearance, but instead consider the real value of an
education.

High school: I chose one with tuition costs of $25,000
annually... because I got a full merit-based scholarship.  Not a hard
decision, given that my other options would've required $10,000+
contributions from my parents.

College: Turned down several Ivies for a well-respected West
Coast private school because, well, I got another full ride. I got help
with my rent for the first couple years, but worked 2-3 jobs to make
myself self-sufficient, and even socked away money in my Roth IRA
before I reached voting age.

Side note:  I find it very disappointing that the FAFSA application for federal aid is getting increasingly difficult to comprehend, potentially discouraging lower-income families and students for applying for much-needed aid.

Medical school: No full rides here, but scholarships,
financial aid, and smart planning meant my parents never saw a single
tuition bill.  I'm in debt to Uncle Sam for 6 figures, but it's locked
in at an interest rate lower than inflation.  No worries there.

If the Manhattanite with a lifestyle similar to that profiled in the
article spent time at home with their kids and encouraged them to work
hard, they could eliminate over $110,000 from their annual spending. 
That's not an insignificant sum at all.

What would you do with $100,000 a year?  I'd put it towards my house
downpayment fund, travel, college education for my (future) kids...

Image from flowforall.org

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