Helping My Adult Child Navigate Savings

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  • #2447

    My 22 year old daughter graduated last spring with a degree in Molecular, Cellular, and Developmental Biology and promptly moved home after her graduation. Her decision to move home was motivated by two reasons. One, she needs to save money for medical school. And two, she needs time to study for the MCAT. Moving home has allowed her to juggle studying, working two jobs, and putting money into the bank for her tuition.

    Medical school comes with a huge price tag, and she knows that she will be taking out loans to finance this part of her education. But whatever she can save now, will help her manage the bills she incurs during medical school later.

    Moving home gives her two years to save. Interest rates are relatively low right now, and her money is needed in the not too distant future. So to maximize savings we looked at online CDs (certificates of deposit). Historically, CDs pay more than a standard savings account, and online depositories tend to pay a higher rate than brick and mortar institutions. Because she will need the money sooner than later, but not all at once, she is setting up CDs with staggered maturity dates.

    Meaning, that right now she is investing in an 18 month CD, and in three months (after more money is saved) she will invest in another 18 month CD, and again three months later. With this strategy she will have funds maturing every three months – after the initial 18 month period. At that time then she can decide to withdraw the money for use, or roll it over for another set time period. This gives her access to money when she will need it and allows her to earn just a little bit more in interest.

    When it comes to paying tuition – every little bit saved will help. What strategies have you used to help save for big expenditures that are not that far off? Do you use CDs as an investment vehicle?


    We did something that actually backfired on us. We invested in an insurance type of product that was supposed to increase over time. We had been promised that there would be over $70,000 by the time my son went to school. Alas, it was just under $25,000 when he cashed it in, barely enough for one year. Now he is dealing with some loans that he shouldn’t have had to get if we had been smarter with that investment.


    Oh, Zipporah, that sounds like a nightmare. There are so many investment vehicles that it can get confusing. I personally stay away from annuities, though I do believe that there is a time and place for them.


    I think CD’s is an awesome idea and strategy to save for the immediate future. It also keeps you from touching the funds too soon with the early withdrawal penalties. Wins all the way around.

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