By David Lawhorn
Plan Administrator, Kentucky Education Savings Plan Trust
August 31, 2015
For many years, one of my key job responsibilities has been to share information with families across Kentucky on the importance of saving for college. My official title is “KESPT program administrator” which means that I have oversight of the state’s 529 college savings plan, the Kentucky Education Savings Plan Trust (KESPT).
My wife and I have a daughter who will be entering college soon, so other parents often ask me if our family invested in a 529 plan. I love answering that question because first of all, the answer is, “Yes!” And secondly, it gives me the opportunity to share with other families how easy saving for college can be.
By making small adjustments over the past 16 years, my family saved more than $57,400 for our daughter’s 529 college savings fund. In most cases, our family did not notice any difference in our lifestyle or monthly budget. Here is how we did it:
1. Payroll Deduction – Our family set up payroll deduction into our daughter’s 529 account with my employer 16 years ago. Average amount contributed per pay period was $25 x 24 paydays = $600 a year x 16 years= $9,600
2. Diaper Money – Once my daughter was out of diapers, we directed the diaper money to her college savings fund. Monthly diaper budget was $40 x 12 months = $480 a year x 12 years= $5,760
3. Day Care Money – After our daughter started public school at the age of five and no longer attended day care, our family directed 25% of our day care budget toward college savings: $50 x 12 months = $600 a year x 10 years= $6,000
4. Coffee Shop Money – Seven years ago, our family decided to cut back our coffee shop visits to once per week and directed the difference in cost to college savings. Monthly Coffee savings was $10 x 12 months = $120 a year x 7 years= $840
5. Water vs. Soft Drinks – When dining out, our family chose to order water with meals instead of soft drinks. Not only was this a healthier choice, it allowed us to direct the savings to our daughter’s college fund: Monthly soft drink savings was $30 x 12 months = $360 a year x 15 years= $5,400
6. Land-line savings – Nine years ago, our family discontinued our telephone land line service and directed the savings into our daughter’s 529 plan. Monthly land-line savings of $34.70 x 12 per months = $416.40 a year x 9 years= $3,747.60
7. Car Payment – When our family paid off our 2001 vehicle in 2006, we directed 25% of the car payment to our daughter’s 529 plan. $49.75 x 12 months = $597 a year x 9 years= $5,373
8. After School Program – When our daughter entered middle school six years ago and she no longer needed an after school program, we directed half the monthly cost to her 529 plan account. $50 x 12 months = $600 a year x 6 years= $3,600
9. Hobby Job Income – About 10 years ago, our family started to invest our “hobby job” income into our daughter’s 529 plan. Some years the income was modest and other years it was over $1,000. Average annual hobby job income of $500 x 10 years = $5,000.
10. Brown Bag Lunches – My wife and I bring bag lunches to work three times a week. That savings is directed into our daughter’s 529 plan: $15 x 50 weeks = $750 a year x 16 years= $12,000
With very little effort, we were able to direct a considerable amount of money to our daughter’s college savings account over a 16-year period. We’ll be sending her off to college with financial peace of mind, which is priceless. If our family can do it, yours can, too!
David Lawhorn is the plan administrator for the Kentucky Education Savings Plan Trust and his wife of 22 years has been a public school teacher and high school guidance counselor during their 16-year college savings mission for their daughter.
For more information about Kentucky’s 529 college savings plan visit kysaves.com or call 877-598-7878.