How do tap college funds for X3 kids?

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What's the fair method, assuming (which is a big ASS out of U and ME assumption) that all 3 will go to college or trade school, of tapping funds?

Let's say you have 3 kids and they are 5 years apart, so they'll be no overlap while in school.

The month before college starts, they ask you for a check and you have $20,000 in each account.

Well, you are obviously going to go through that all (as most parents will) for Child 1, but perhaps by the time Child 3 gets there, he may have $40,000? So, he would get 2x as much, no?

It's a confusing matrix to think about!. . .theoretically, all of the kids should have the same 18 years of even contributions at 5-6% return on average. . .but I admit, contributions have been piecemeal, along with returns.

This looks like a job for. . .JimOhio!!!!

[photo]

We don't have individual accounts for each child and instead withdraw from a large cash account. May I'm just too lazy to do the math.

[disneysteve]

Just one of many reasons why we only had one child. Don't have to deal with questions like this.

[kork13]

We don't have individual accounts for each child and instead withdraw from a large cash account. May I'm just too lazy to do the math.

I actually figured this out at one point, and as photo said, it's actually easier with a single account... but you can do equivalently the same by considering them as a single sum total account.

Bottom line, it's easiest if you basically project out to the last kid finishing school. Take it year by year, assume an appropriate level amount of growth (3-5% ?), add in any expected future contributions, and project what the total annual balances will be. Then in the appropriate years, subtract the amounts you're looking at giving to each kid. Just find the right amount that keeps it even between kids and runs your balance down most of the way toward 0 at the last kid.

To help out, I've attached a spreadsheet that you can adjust as required. It's a fairly simplistic calculation, and does everything off of annual balances/averages, but it's good enough to give you a decent estimation. I won't go into the details of my theoretical workup, because I'm sure it's incorrect -- it assumes ages, payout amounts, and contribution amounts. However, hopefully the spreadsheet is laid out simply enough that you can move things around and adjust as required.

P.S. I'm working on a Mac with Office:Mac, so the formatting might be a little off for you -- mostly with font, column, and view sizes... just to warn you ahead of time

[kv968]

What's the fair method, assuming (which is a big ASS out of U and ME assumption) that all 3 will go to college or trade school, of tapping funds?

Let's say you have 3 kids and they are 5 years apart, so they'll be no overlap while in school.

The month before college starts, they ask you for a check and you have $20,000 in each account.

Well, you are obviously going to go through that all (as most parents will) for Child 1, but perhaps by the time Child 3 gets there, he may have $40,000? So, he would get 2x as much, no?

It's a confusing matrix to think about!. . .theoretically, all of the kids should have the same 18 years of even contributions at 5-6% return on average. . .but I admit, contributions have been piecemeal, along with returns.

This looks like a job for. . .JimOhio!!!!

I'd say an even bigger assumption than all 3 going to college would be that your money will grow 5-6% in this market in that amount of time

I'd think more along these lines...if you had 20k in the second one's account when the first went to college and got 6% annually without you even putting any more in, you'd have about $26,800 when the second kid was ready to go. Well with college tuitions rising ~4-8%/year, purchase power-wise that $26,800 will be the same as the original 20k. And if the first kid thinks he/she got short-changed in the deal, have them go back and take a finance class to see that they didn't

[MonkeyMama]

I also agree with saving in just one account.

Though I think it's very important to have a plan, I think it's important to have a flexible plan.

For reference, my sister and I both inherited money. But, since she is several years younger, she had time to invest and ended up with 4 times the money. She didn't go to college. (It wasn't college money specifically, but raises similar issues).

My spouse went to a public college that was easily cash flowed, and his sister spent her college savings on a private college. His parents handed him the college fund when he graduated, because they hadn't touched it. That said, I am pretty sure that was the agreement ahead of time, and made clear to everyone. (That if they didn't spend the money on college, they got to keep the cash. They were involved in the decision - no hurt feelings).

I think there are so many variables in these cases that it is hard to build an inflexible plan. & in my examples there are only 2 children, not more than that. So, I imagine more kids only makes it more complicated! I'd start thinking through different scenarios and just think about what you would want to do in different situations.

In both these cases, equal amounts were saved, er, contributed. Maybe that is a good place to start.