The Hartford Small Business Insurance knows that running a small business is a big-time commitment. So this holiday season, they're celebrating hard-working small business owners with a chance to go to I Heart Radio Jingle Ball in Miami on December 16th. Nominate yourself or another small business owner for a chance to win a trip for two.

Includes airfare, two-night hotel, tickets to the show, plus $1,000 in spending cash. For official rules and entry information, visit IHeartRadio.com/SmallBusiness. I am a young father of two young children. I have a two-year-old son and a six-month-old daughter. Education is very important to me, both formal education and informal education.

I have a master's degree, a bachelor's degree, a high school diploma. I'm also a professional financial planner with a high degree of expertise in financial planning. I'm a certified financial planner. I actually have a master's degree in financial planning. But I refuse to establish a college savings account for my kids.

Now, it's not because I don't know anything about them. I'm actually a subject matter expert in that area. But I just think they're stupid and a waste of money. And today I'm going to try to convince you to join me. Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets and I'm your host.

Thank you for being with me today. Today we're going to deal with this question and the inspiration comes from an email I've received from a friend of mine who's a young father asking me, "Joshua, should I open an account for my kid?" And my response is obviously unemphatic, "Absolutely not." Now, perhaps if you're not familiar with Radical Personal Finance, perhaps you're surprised by an opinion like this.

"Oh, why would a financial planner not do that?" And no, I'm not wasteful with my money. I'm actually a dedicated saver. I do plan and prepare for the future. I think carefully about all the opportunities that are facing me. So it's not just that I'm a spendthrift. I'm really not.

But I have some reasons and ideas that I want to share with you. But let's start with this email that I received from my friend, a personal friend of mine. He wrote me this note. He said, "Joshua, my wife suggested I reach out to you for advice as we plan to start saving for our soon-to-be-born son's education.

It's hard to believe it's going to be just a few weeks now. I've looked into our state's 529 plan but wasn't sure if there were better options. Any advice would be greatly appreciated, and I'll obviously check the Radical Personal Finance archives as well because I'm sure you've put some content up there.

Thanks for any advice." My response to my friend was, "Don't open one." But I've got to defend that a little bit, and so I told him I'll record a podcast episode. And lucky you, you get to listen to my episode. Because here's the deal. Although I am massively in favor of education, my position is that education is of utmost importance.

And although I'm in favor of some formal certification, my position is that formal certification can be useful for at least some people in some careers. I don't believe that college plans are a good idea for the majority of people who are in situations like me as a young father or situations like my friend.

In today's world, college rarely equals education. Can it? Yes, it can, but it rarely equals education. And college certification is rapidly losing value in the marketplace. And so when you are sitting down and looking at a situation with limited resources, in my opinion, saving for your kid's college represents about the worst of your potential options.

And if it's not the worst, it's certainly at least the most inefficient choice, the most inefficient way for you to deploy your capital. The specific college accounts are of limited value, and the opportunity cost of participating in those accounts is simply just too high in my opinion. And so I'm going to try to convince you to come over to my side, which is that parents should not save and invest for their kid's college.

Rather, they should save for and invest in their kids. And there's a big, big difference between those things. So I'm going to give you four major overarching reasons at the beginning of this show that I believe this position to be a good one for many people to consider. I'm also going to give you five specific ideas on alternatives, better uses of the dollar that you can use instead of opening up a 529 plan or a Coverdell educational savings account.

And finally, I'm going to give you, if you insist on saving for college, I'm going to give you three options that I think are better to consider first than a 529 plan or a Coverdell ESA. Please note, I am not ignorant of the benefits of specific college savings accounts.

If you would like to hear an in-depth discussion of what they are, how they work, the major overarching function and structure of these plans and the specific little hacks that you can apply to them, there's about 15 to 20 hours of content in the Radical Personal Finance archives. Just search the website for 529 plan.

You'll find all kinds of detail. I am not ignorant of those benefits. And I'm also not saying that nobody should consider using these accounts because they are a useful tool in the tool belt of a competent financial planner. And in those shows, I clearly describe where I think they are useful.

But for somebody like me or for somebody like my friend, prudent young parents saving for their kids, I don't believe they're useful. So I hope you'll stick with me and give me a chance to present my opinions to you. Before we get through to the details of those reasons, I want to talk about our sponsors for today's show.

And appropriately, today's sponsor number one is Jay Fleischman. Jay is a student loan attorney, a bankruptcy attorney, and host of the Student Loan Show, Student Loan Show podcast. He's been interviewed on Radical Personal Finance twice. And if you have student loans or if you know anybody who has student loans or if you're considering getting student loans, you should go and listen to those two episodes.

They're episodes 214 and episode 258. Just search the website or look back in the feed on your mobile device. You should listen to those shows because you'll learn more about student loans over the course of about that three hours than frankly you probably ever have known. But more importantly, if you have student loans, you should consider sitting down with Jay for a personal option.

He is a consultant, a very competent consultant, travels all over the country, teaches other student loan attorneys how to actually work through their options. And he's made available his consulting services at a reduced price for listeners of the Radical Personal Finance podcast. For details on that, go to studentloanshow.com/radical.

But if you have student loans, as we begin 2016 here, make sure that you at the minimum sign up for a email review of your student loans with Jay Fleischman. Details on those packages are at studentloanshow.com/radical. And also while you're there, make sure you subscribe and listen to his podcast.

Sponsor of the day today, number two, is Trade King. Trade King is my choice and my personal recommendation and endorsement for who you should consider housing your brokerage accounts with. Trade King is a wonderful discount broker. You can make trades with them for $4.95 on stock trades. And they will give you a great deal on the price of your trades and the price of holding your accounts.

But they'll also give you great customer service. And the key thing to recognize with opening a brokerage account is in many ways, the actual substance that you own, the investment is a commodity. One share of Apple stock in a Trade King account or one share of Apple stock in a Merrill Lynch account or one string of Apple stock in a Charles Schwab account, those all function exactly the same.

It's one share of Apple stock. So what can you look for? Well, you got to look for a good price. And that's where Trade King is among the cheapest of the options out there. They're not the cheapest, but you got to correspond that with good value. And Trade King prizes themselves on customer service.

I've been to the Trade King offices. I've met the CEO. I've spoken in depth with some of their executives. And I am confident that they are an excellent resource for you to work with for your brokerage. So if in 2016, you're thinking about opening a trading account, giving your hand, whether that's short-term trading or just buy and hold investing, consider going to TradeKing.com/radical.

If you sign up through that tracking link, not only will it help me, it'll help them to measure the performance of their advertising relationship with me here on the show. Thank you very much. But you'll also get $100 in your account if you follow the conditions there. And basically, you've got to fund the account with $1,000, and then they'll do three trades.

And you can read all the fine print there, but they will give you an extra $100 bonus for opening an account through that link. So if you've thought about establishing a trading account, purchasing some shares here, you want to get yourself started or at least get your account funded and start to look at your investment plan here, please go to TradeKing.com/radical.

Claim your $100 offer. So let's get to my reasons why I think that you are ill-served by opening college savings accounts for your kids. And reason number one, it's my opinion that the market value of college certification and screening is declining and will continue to do so. Now, those of you who are familiar with data and statistics should instantly say, "Well, prove your case, Joshua.

Where's your evidence?" And I would say, "Well done. I definitely need to prove my case with a statement like that." Because we're all familiar with the chart that shows that the higher your level of formal education, the higher your earnings ability. Whether it's a high school graduate, a high school dropout earns the lowest amount, high school student earns a little bit more, and the median wages absolutely do rise based upon your level of formal education and your level of certification.

So if I'm going to make a statement that the market value of college certification and screening is declining and will continue to do so, you should demand some good evidence. I do not dispute the fact that, on average, college graduates earn more than non-college graduates. I do not dispute that.

And I don't even dispute the fact that the college degree can be very valuable, very valuable in the marketplace, even especially for somebody with a technical degree. Details on that later in the show. But I do dispute the fact that for the majority of college graduates gaining some kind of miscellaneous liberal arts degree, that their college education is what really makes the difference for their level of educational attainment.

Number one, go back through the data and do some research and compare the number of people who start college versus the number of people who finish college. And all of a sudden you find that the numbers change a little bit. And what you find is that college graduates who earn well are the ones who finished their college degree.

They were the ones for whom college was a good choice. And yet there are many people who, based upon data and saying, "I got to go get a degree," put themselves in very difficult positions. And they're calling Jay Fleischman, where they're deeply in student loan debt, for a degree that they didn't finish that has zero market value, and college just wasn't right for them.

Next, I personally believe there's much more correlation between the type of people who finish college degrees and their career success than causation. And consider me as a sample set of one as I illustrate my own personal experience with college. The highest level of formal academic certification that I've achieved is a master's degree.

I think at some point I will wind up earning a PhD or doctorate degree in some discipline, possibly in financial planning, possibly in some completely different unrelated field like philosophy. I have an interest in those types of things. But I don't expect that PhD or doctorate to make any impact on my earning ability.

It's just simply the type of thing that fits my character set. I'm the type of person who finishes things. And if you put a challenge in front of me that has graduated steps to it, then I'm the kind of person who will just go ahead and try to achieve the highest that I can.

And many people, especially those people who are good earners, have similar character traits. I can give you an example from my youth that will illustrate this more clearly than even a college education. I'm a licensed amateur radio operator, ham radio operator. And when I got my first amateur radio license, I think when I was 11 or 12 years old, 10, somewhere in that, before I was a teenager, I had very little interest in radio.

I had a little bit of interest, but not a ton of interest. But I got it simply because I had a wallet. And the only thing I had in the wallet at that time was cash. And I didn't have anything else to put in the wallet. So I thought it'd be cool to put some kinds of licenses in the wallet.

So my dad was an amateur radio operator. He said, well, get a ham license. So I got a ham license. Well, at that time, there were five levels of amateur radio licensing. There was a novice class, a technician class, a general class, an advanced class, and an amateur extra class, which is the equivalent of bachelor's, master's, and PhD.

Today, there are three levels of licensing-- technician, general, and amateur extra. So at that time, I quickly got my novice license. And I quickly got my technician license because what I really wanted to be able to do was to be able to talk in the local area on something in amateur radio terms, which is called the 2-meter band, which is a local VHF, very high-frequency radio waves that are suitable for your local area.

And that's what I wanted. And I needed a technician license. But I'm the kind of person who likes to finish things. Now, the major benefits to increasing your level of licensure in amateur radio are simply that you have expanded operating frequencies on the amateur radio bands. You can use more of the frequency spectrum.

And you can use additional bands if you get a higher level of licensing. But this is primarily applicable in what are called the HF, the high-frequency bands. And I didn't really do much of anything in the high-frequency bands. But I wanted to finish things. I went as high as I could in the licensing classification to that time.

But my constraining factor was my speed with being able to communicate using Morse code. And as you went up in the licenses, your speed had to increase. I believe it was up to 30 words per minute. And I wasn't dedicated enough to get my speed past about the 15 words per minute that I needed for the general class.

Well, a few years later, the amateur radio rules changed. And they eliminated the higher speed necessary for the higher levels of licensing. Well, I immediately went out, got a book, studied it for a few hours, went and took my amateur extra test, and got the highest level of licensing as soon as it became easy enough for me to do so.

And I didn't have to do the long time-consuming Morse code thing. I had zero benefit or zero practical use for the additional licensing. It was just bragging rights. And I wanted to have the highest level. I checked the box. I went on with my life. Didn't touch a radio until recently.

Didn't touch a radio for five or six years. Just never bothered with it. But I still keep that license because I'm the type of person who wants to finish things. Now, that same thing has been evident in my life through other areas. So the nagging thought of, "I want to get a PhD," is simply a calculation of the hard work of it versus the interest and a desire to go as high as I can.

Many people who have college degrees are similar. When you apply those things over into the work field, it shows a character ability. And you bring somebody who had academic ability, that person is likely to go higher. And when the path into college is relatively easy in today's modern U.S.

American society, most people like me are going to do what I did and just take the easy path, easy route, go into college, have that as a backup plans. And because college was so instrumental in my parents' generation, as far as being that mark of success, that mark of a guaranteed source of income, even though the market has changed, people still do it.

And it's not that college causes that financial success per se. It's just that the type of person who's likely to be skilled in college is also likely to be skilled, more likely to be skilled, in a modern technical workforce. So filter that data for me in terms of causation versus correlation.

And prove me the case. I believe it's much more correlative than causative. But more important than either of those two reasons, the marketplace is changing. As the best evidence of that, consider the news stories back in 2014 when Google, one of their key employees that was head of HR, some high-level dude, I think the guy's name was Block or Bok or something like that.

Google came out and started talking about how they, at this point, were generally disregarding college degrees, certifications, and GPA because there was no predictive value from those factors that would indicate the level of success and the level of effectiveness that an employee would have. And they were looking for people who had established their own path, who had demonstrated other skill sets.

Thankfully, as I understand it from the news reports I read at the time, they were also dumping some of the weird questions they would ask interviewees. The Google interview process was always legendary. I was always offended by it. I thought it was stupid. But they had their reasons. I never understood them.

But thankfully, they were shifting away from some of the wacky questions that became so famous. But the point of the college degree was that it wasn't predictive of success. Now, it's easier to see that in a quickly moving tech company that has to be at the vanguard of an industry that is, in and of itself, very fast-paced.

But even though that pace of change is harder to see in other industries, the same thing is happening. And the idea that you can prepare a student in today's world with 12 years of studies to be well-equipped for what the world is going to look like 12 years from now is laughable.

And the idea that you can teach content in four years of university studies that's going to be applicable to the world that exists in almost any industry four years from now is, I wouldn't say laughable, but it's a hard pill to swallow. There are very few hard sciences in which that may be the case.

And there might be some degrees that teach principle and have a well-developed body of knowledge, but most of the degrees that many of the students are earning today, these soft, squishy liberal arts degrees, very little benefit. And the world is marching on. College is not going to be predictive of career success.

The whole formal structured career plan that was supposedly going to be based on college has disappeared. And if your industry is not being affected by that, I believe it will be. So we've got to do something completely different. Those are forward-looking statements. I believe there's good evidence for them, but you've got to look at it.

Just ask yourself, is your career success based on your college degree? And are you still using that for predictive purposes in your business? Now, there are businesses that will still use that as a screening tool. So in my initial opening statement of my position, I do think that formal certification can be useful.

In my business, for example, financial planning, college certification is still a screening tool. But the presence of a college degree is not the guarantee that it possibly was years ago. Still benefits. If you want to know all my benefits, my reasons, my in-depth discussion, go listen to episode 227 of the show entitled "The Five Benefits of College and Radical Ways to Exploit Them." There are other benefits of college.

But when you take those industry changes, those technical changes, and they look forward, and you combine that with the fact that any person can now effectively market themselves using digital tools and can market themselves into a digital market, can market themselves into a job, into a career, into a specialization, that is truly powerful.

And that demonstrates, that type of marketing is the type of thing that companies are looking for. They're looking for people who are self-starters like that. So point number one, the market value of college certification and screening is declining. And my prediction, it will continue to do so at an ever-increasing speed.

Don't put your hopes for your child's future in a college degree. My argument number two, the cost of college is declining and will continue to do so. Now here again, I'm at odds with the majority of news articles that you read about the constant never-increasing cost of college. But read those articles and ask yourself this, what are they using as the metric for the cost of college?

And you'll usually find a couple of factors. Number one, they use the retail cost of college. What's quoted in the school's catalog is their retail price, rather than the actual cost that students are paying. Number two, they don't include the cost of classes. They include the cost of classes and room and board and tuition.

And so yes, you're subject to the same factors. And then often, if you look at it, just because the general cost is increasing, doesn't mean that the alternatives are not there. Today, the best one I've seen, I think it was, what was it called? University of the People? I can't remember.

But I saw one college, one online university that is offering college degrees, accredited certified college degrees for about $4,000 total. There are a bunch of options that will offer you an accredited online degree for $10,000 or $15,000 total. You compare that to the cost of $15,000 a semester, and there better be some significant economic benefits on the other side to make you be willing to pay $120,000 total, if you're comparing $15,000 a semester to $15,000 total.

Big difference there. And when you compare the cultural dissatisfaction that recent college graduates have with the price that they paid for college, the price competition is only going to get more and more severe. Now, we're stuck with all the legacy costs of the ridiculous system that exists. We're stuck with way too many professors earning way too much money, way too many big fancy ivy-covered buildings, and the world has gone technical and online.

If you want to support that system, go for it, but I'm going where the future is. If I were doing it today, not a chance in the world I would spend the money it costs to go to a traditional brick and mortar university, when I can massively cut those costs and punch that certification ticket with an online-only school.

So the first factor that the cost is declining is that there are newer, cheaper options. The next factor is look at the political winds. By the time your or my child gets to the age of college entrance, the majority of college educational options are likely to be free, as in paid for by your fellow taxpayer as part of state benefits.

So why on earth should you bother to waste your time and money saving for something that the political winds say is going to be free? Do you really see anybody arguing against that? The majority of you who are in the listening audience, the majority of US American citizens have their children in a state paid for school.

Your fellow taxpayers are sending your kids to school. So most of you are not saving for your own kids' private education. You didn't need to plan for it, so you're planning for college. Well, look at the political winds that are in this country. My best guess, Hillary Clinton will be elected our next president.

Bernie Sanders has obviously gained a huge foothold. None of the Republicans have any really serious objections to the expansion of state-sponsored education. So why would the trend not continue? Over the last few years, you've got people striking on the street. You've got all kinds of dissatisfied people with their student loans.

Government is already heavily involved with the establishment of expansion of federally guaranteed student loans, stabilization of interest rates. It's this cultural thing. It's the only state-sponsored religion that we have in the United States of America. It's the religion of state-run schooling. So why would it not be expanded to the college age?

So could I be wrong? I could be. But my guess is by the time my two-year-old is there, it'll be free. And thank you all for paying for it, if I ever send my kid to that. Who knows? We'll have to see what happens in 15 years. But it's going to be free.

The number of people you say, "Well, if I have money, I'm going to vote against it being free because then it wasn't fair." Well, the number of people who are going to vote against it is very small versus the number of people who will vote for it. The trend in most of Europe is to have free college tuition payments.

I don't see any practical, serious indications that it's going to be any different in the United States of America. So my prediction, it'll be free. Why bother to save for something that's going to be free? Interesting question there with regard to macroeconomics. I'll leave it for you to consider.

But even if it's not free, paid for by the state, for good students, college today is free and can be free. And if your child is not a good student, then why on earth should you torture them by going to college? The people who do well in college are the people who are good students.

And the people who are good students already have tons of options to get paid for for school. I was a good student in high school. If I had made different choices, I could have gone to a state-run school and just gone to a traditional state-run school and with scholarships, grants, academic stuff, fully had that entire thing paid for.

I had to pay for some out of pocket because I chose to go to a private university instead of a public university. But why torture your child with college expectations if they're not a good student? And if they are a good student, there are already tons of options to go to school for free.

So argument number two, the cost of college is declining and will continue to do so, especially for those people who are good students, especially in the cultural environment that we have, and especially as the entire world transitions to the delivery of educational materials over online. Number three, the financial and tax benefits of college savings accounts are minimal for most families.

The tax savings are minimal and the investment options are mediocre, generally speaking. Why are the tax savings minimal? Number one, most people don't put much money in them. Generally, people like my friend. I don't know. I haven't asked his specific situation, but people like my friend are going to set up an account and they're going to put $100, $200 a month in there.

Well, when comparing that amount of savings to the total retail cost of a tuition bill, it's meaningless. In my financial planning career, meeting with over a thousand people, I couldn't count dozens who had fully funded educational accounts. There were not that many. There were some, but there were not that many.

Generally, the only people who had those fully funded accounts were people who had done a prepaid tuition program, paying a tuition only approach, things like that. But what person is, I mean, most people are not going to set up, setting aside $700 or $800 a month into a college savings account, which is probably what they need in order to pay the tuition at the prestigious Ivy League school.

So most people aren't saving very much. Number two, the tax benefits on college savings accounts are slight. There's no upfront tax deduction for contributions to an account. So you fund the accounts with after-tax dollars. The only tax benefits that you get is the year by year deferral on gains and the possible tax-free distribution when those gains are used for an accredited certified college program.

So how much money is that actually? Well, if you want to hear some detailed calculations, go back and listen to all my shows on 529s and ESAs. It's not that much, especially when you factor in the volatility, which leads you to the fact that you generally are funding these accounts with mediocre investments that aren't very aggressive.

By mediocre investments, I mean many of the accounts are restricted to mainstream investments. We face at least a much more difficult headwind in the forthcoming decade, much more difficult economic headwind in the United States, especially for mainstream investments. And these investments, due to the relatively short duration of planning for college as compared to planning for retirement, you have to be much more conservative, which automatically lowers your returns.

And worse, many of the investments in these types of college plans are overladen with fees and expenses. What I mean about time horizon is that if I'm planning for my two-year-old's college tuition payments, and I'm going to assume that he's going to go the traditional route of going to school at the age of 18, going to school from 18 to 20, my total prospective time horizon is 16 to 20 years.

That's longer than the five-year time horizon that we financial advisors tell people to plan for with their investments. So I've got, okay, I've got 16 to 20 years. But what happens when my kid starts to become 15 years old and we're going around doing the great college tour? I'm going to be looking pretty carefully at my accounts.

And especially if I'm facing a big tuition bill, I'm going to start to pull that account back in terms of volatility. And I've got to manage it much more carefully than a stock account that I've got set aside for my retirement where I've got an investment time horizon of 30 to 40 years.

So when you compound these factors, I don't believe the tax benefits to be all that great for parents who are going to be setting aside $100, $200 a month. Tax benefits can be great for parents or grandparents who are setting aside massive lump sums early in their child's life.

For details on those strategies, again, go listen to all of my previous shows. But for me, for my kids, tax benefits are minimal. Investment options are often poor. Reason number three to avoid the accounts. And number four, when you calculate the opportunity cost of saving money for my kid's college, the opportunity cost, what I'd be giving up with that money is simply too high, especially given the fact that I can't know the future, and I especially can't know the future for my child.

I don't know what the college situation is going to be like in 15 to 20 years, neither do you. I don't know what the economic value of a college degree is going to be like in 15 to 20 years, neither do you. I could be right about the political wins or I could be completely wrong about them.

None of us know, we'll have to wait and see. And I don't know if college is going to be appropriate for my child. I think the system will look dramatically different in 15 years. I see the market forces at work and I don't see how the entrenched bureaucracy can withstand those market forces.

So I think the situation will be different, but I just don't know. When you add all of that uncertainty to all of the uncertainty with investment choices, all of the uncertainty with tax codes, all of the uncertainty with all of those other factors, there's so much uncertainty. And when you look at some of the alternatives that I'm going to lay out for you and the benefit those can have in your child's life, I believe the alternatives are much more certain.

So when you compare all that uncertainty with some of these much more certain alternatives, I am not willing to give up the things that I can do with the money now to invest in my children in order to segregate it into a separate account that is specifically earmarked for college expenses.

And let's go on to those five alternatives that are big picture alternatives I'd like you to consider. Before I do that, I need to correct myself on one thing I misspoke on the previous point where I said the financial and tax benefits of college are minimal and I stated that you get no upfront deduction.

Let me clarify that. These details are totally clear in the extensive shows that I've done previously, but let me clarify because some of my sharp-eared listeners will catch me in that mistake. There are no upfront federal tax deduction benefits for contributing to most college savings accounts. It's possible that there can be some state income tax deductions for some 529 plan contributions.

So check your state. Those vary dramatically across states and they may or may not have value depending on the state that you live in, but they're minimal. But there's nothing on the federal level. So just that quick correction and let's go on to my alternatives. Alternative number one, better use for the money that you would save in a college account is this.

Switch your focus from helping your adult children to helping your children children. So number one, if you just change from focusing on the four years of your child's life from 18 to 22 to focusing on the four years of your child's life from zero to four, I believe you'll have much better results.

Time will tell. You're welcome to look at my children in 20 years and we'll find out together. But I think the argument is compelling and here's some ideas for how to do that. Number one, take the money and if you have to use the money to do this, get mom home with the kids.

Get mom home with your little babies and your young kids. That is much, much tougher for mom, but it has dramatic benefits for the child. Now, I'm always interested in personally, this starts first with a religious conviction because much of the character formation from children comes in the first few years and I'm not willing to surrender that over to paid caregivers of questionable reputation.

But whether or not you share my personal religious convictions, I'd encourage you research the subject. I'm always interested in the intersection of the modern secular social sciences with my own personal convictions. And there's a bunch of interesting data on this. I'll link over to, well, I just got a book as an example.

I just got a book called Home Alone America by Mary Eberstadt, the hidden toll of daycare, behavioral drugs and other parent substitutes. One past, I guess she wasn't a guest. I had scheduled an interview but it didn't work out. Penelope Trunk, formerly associated with the brazen careerist is a woman who has written extensively about this from a secular perspective.

So whether or not you share my perspective or not, check it out from a social development, a social science development. And it's fascinating. Most families would enjoy that. Most moms want to be with their children, especially during those early formative years. I don't particularly care if I can finance or fund my child's college education if I've already invested in them for the first few years.

So take the money and get mom home. Even better, take the money and get dad home. Get both parents involved. Downsize your lifestyle. And if you downsize your lifestyle or you take that money that you would otherwise save and you use it for less overtime, less weekend work, less travel, transition to a job that gives you more flexibility, transition to a job that you can integrate your children in, transition to a job that helps with you to have a relationship.

Now you've got the ultimate. And it really bothers me when I see parents who are trying to set aside money for their child and what your child is craving is not money but time. So get mom home and get dad home. And then invest that time and money into training their character and into early childhood education, whether that's formal education or informal education.

Go and do the research. The best one to research would be if you want to talk about the formal education side, research all the Montessori schools. They're the most vocal with their research on early child education. Spend the money you would spend on four years of college on an early Montessori education for your child or create your own option of experiences.

One of the biggest things that for me is if you study the amount of knowledge that a child learns from the amount of the character development, their worldview, their vocabulary, their perspectives on life, so much of it is determined in the first three, four, five, six years of life.

So if you're raising your child in front of a TV or you're paying a minimum wage daycare worker to care for your child so that you can go off and earn a bunch of money and save it for your child's college education, don't think that's the most efficient use of your money.

So switch your focus from helping your adult child to helping your child child. And if you do that, you won't need to bother with paying for your child's college education because they'll have the ability to figure it out themselves. I didn't need my dad to pay for my college education.

I was easily able to figure it out myself. Many of you were as well. But would I have had the character and the discipline to do that if my mom and dad hadn't been there in those first few years? If I hadn't learned to read and to study at an early age, if I hadn't developed those academic skills, if mom and dad hadn't poured their lives into me in those first four years?

Consider it. Number two, switch your focus from college education to primary education. It's very difficult for me to understand why anybody would save and bother to save and buy college schooling for their child if they haven't created some kind of better option in the primary and secondary years. Now, we can argue night and day about what option is best, whether it's unschooling, homeschooling, self-directed education, Montessori, your local charter school, a private school, Thomas Jefferson education, or whatever the latest thing is.

You got to deal with that. But any option like that is going to be better than government schooling. Now, it's a little bit scary because if you invest in those options, your kid might not need the college education because they might be financially independent by the time they're 25 or they might have enough money to pay cash for their own house by the time they're 23 or they might have a business that they started in their spare time when they were 15 that has them earning $100,000 a year by the time they're 18.

It's a little scary, but all of those things will be much better for the economic future of your child. So simply switch your focus from college education to primary education. And here's the fun way to do that. Calculate what you think is the cost of college and then ask yourself, "How could I spend that money now on their earlier educational opportunities?" And then figure out what's right for you and your family.

It's not my place to tell you what's right, but figure out what's right and be willing to put the money there. Number three, switch your focus from social and societal acceptance to the individual development of your child. Switch your focus from school to education. And then even better, switch your focus from school and education even to character development.

Switch your focus from social indoctrination to personal empowerment and ask yourself, "How can I spend money on the actual individual development of my child?" And if you're writing the checks, you might care a little bit more about the content of your child's curriculum. You might throw out a bunch of the time-wasting stuff that really is irrelevant because every single one of us with a high school diploma and a college degree would look back and easily recognize how much of what we studied was irrelevant.

And you might work on things that are a little bit more relevant to actual social career success. Focus on the actual development of the child. I guess my next one, number four, I just jumped the gun, but invest your money in your child's education, not their schooling. What if I gave you a budget?

Here are just some ideas that I've had working through these with my own children. What if I gave you a budget? Let's say I'm going to save $300 a month into a college account for my child. That'd be a good starting point. At this age, I could fund a state school at the retail price and my financial planning software if I set it aside at $300 a month.

So what if I took that $300 a month and I said, "I have to spend this money now on my child. I can save a little bit of it up and I can take some of that money, but I've got to spend it at least, say, once a year." What if I had to spend $300 a month once a year on my child each year?

Well, if they show some particular skill, some particular talent, I'd have the money to invest in a world-class tutor for that skill or talent instead of just taking whatever we're around and hoping that somehow the local state school has a good professor. I can choose a world-class tutor. I could send that child for a week to go with some world-class tutor in their area of interest.

I could buy a lot of books. So if my child demonstrates a real interest in a subject area, we can cancel a lot of the time-wasting stuff in the government school system and I can buy a lot of books with $300 a month, especially buying used books off of Amazon.

I can afford my high-speed Internet connection so they can have access to the world's greatest tutors there. I can pay for some web hosting fees to help my child develop an online presence. I can buy my child whatever gear and equipment that they need so if they're demonstrating an interest in a technical field and they want to, you know, it was that kid that was building, excuse me, young man who was building robotic arms for his middle school classmate, I could afford to buy the computers or the material that he need for him and give him the money that way.

I could take the money and instead of wasting a summer working a minimum wage job, I could send my kid to Washington DC and tell him to spend weeks wandering the free museums all across the city. Which of you had the time when you were young and your parents did something like that?

Dozens and dozens and dozens of world-class free museums. You think that might help the exposure? See, one of the major problems with college is people are going to college to figure out what they want to do. That's an expensive stupid way to figure out who you are and what you want to do.

Much better to figure out who you are and what you want to do early and cheap and then when you go to college and you know this is what you want to do, you have a purpose behind it and now you're much more likely to be successful at following through, finishing school and you're much more likely to actually use the knowledge and education that you gained.

For me, my own personal story is an example of this. My undergraduate degree is in international business. I use nothing. Nothing from that, no specific knowledge from that degree. Perhaps I use study skill, perhaps I use generalized ability to write or to read or to study or to manage my time.

I certainly had formative experiences during those years, but in terms of actual content, I use nothing of that degree. But then when I got a master's degree in financial planning, I use far more of that because I was a financial planner and many of you the same thing. For example, my friend who wrote me this note is an engineer and just finished a master's degree in engineering.

Getting a master's degree in engineering when you are an engineer is far different than being a sheltered, unexposed 18-year-old wandering into a college classroom trying to figure out who you are, what you want to do and what you believe about the world. So take the money that you would invest in your child's schooling, especially college schooling, and invest it in their education now.

And you probably won't even need to buy any college tuition down the road. And that way, whether or not college is the appropriate fit for your kid, you've at least got some… they have a lot more options. A lot more options. And number five, switch your focus from equipping your child with a college certificate to equipping your child with economically valuable skills.

My best example of this, I interviewed in the past Jonathan Harris, the site member of 10k to talent. Jonathan and his wife Renee are members of the community. They're involved in the Facebook Irregulars group. And they do a great job. But they have a bunch of kids. And I follow one of their children, a young man named Caleb, who is an amateur knife maker.

I follow his stuff on Instagram. And Caleb, I'm actually going to be giving him some advice. I intend to release it as a future episode, but on starting a podcast. But Caleb, I think, is 17 years old. And he's built for himself an incredible platform as an amateur bladesmith, helping and encouraging other amateur bladesmiths.

And the work that Jonathan is doing at 10k to talent, helping your child to actually develop and build talent is truly, truly… it's awesome. Now, Jonathan and Renee haven't told me about what they've spent or haven't spent. It's none of my business. But I'm pretty confident that they've had to spend some money to help Caleb get established.

But if you take the money that you would be putting into a 529 plan, and you take it and use that to buy your son a forge and an anvil, and the special metal that he needs to forge blades while he's blowing through the stuff, screwing up the first 250 versions of it, if you take that and make that investment, then you wind up with a 17-year-old young man who is nationally known as a young and up-and-coming amateur bladesmith.

That's what I mean by opportunity cost. What if you were putting the $300 a month into the 529 plan? Well, guess what? Anvils and forges and metal are not approved qualified distributions from a 529 plan. Which of those is going to make a bigger difference? Now, if you've got the money, can you do both?

Sure. But I don't at the moment have the income where I can do both. And most people who are in my bracket, young families, don't have the money and the income to do both either. And so we rob the now in order to fund the future for a system that's out of date and broken.

If you shift the attention from the four years of 18 to 22, and you shift that from the years of zero to, I don't know, 12, 15, 18, you won't need to do all that hard work from 18 to 22. It'll already be done. And instead of investing in the financial markets where the value will go up and down and your investments will wander around and you're subject to the latest vagaries of the government regulation and a bunch of bureaucrats who write laws, you've invested in a person with whom you have a relationship.

And guess what? Whatever the world is in 15 or 20 years, that person with whom you have a relationship will be competent to fend for themselves. And I think this is one of the best ways that parents can fulfill the old axiom of teaching a man to fish instead of giving him a fish.

My dad didn't fund my college education. He offered to let me live at home rent-free during the years of college if I wanted to, but he didn't fund my college education. Never regretted it, never was bitter towards him, never needed it. I looked at my friends who were dependent on their parents and had this weird controlling relationship with their parents where they had to go show their parents their report cards at 21 years old because their parents were funding their college.

I'm like, "Why don't you just do it yourself?" It's probably a useful concept to talk through. I'm not prepared to discuss it today. But as far as the dependency that continues on and the control that parents probably try to exercise too late because they're financing something. But I just looked at my friend and was like, "Why don't you do it yourself?

Have some self-respect. You're an adult." When you look at the options, there are many more effective uses of the money now, and it's a much more secure investment. The very few ideas I've laid out here are just the tip of the iceberg. Now, let's say that my arguments are not compelling to you, or let's say that my arguments are compelling, and you just say, "Well, I've got the money.

I want to do both. I'll fund what's now, but I also want to fund the future." Awesome. Here are three final ideas. Number one, don't dilute your wealth-building efforts and fool yourself with the idea that by funding various accounts on a minimal basis, you're somehow going to become rich.

Start by getting rich and then paying for the stuff that you want. Here's what I mean. Many people do a little here, a little there. Put a little bit of money in a savings account to save for Christmas, pay a little extra on their credit cards, put a couple percent on the 401(k), put $100 a month into the 529 plan because that's what we can afford, and they don't make much progress because they don't really focus on anything.

Do a little here, there. As Ziegler used to say, "They're wandering generalities." I believe the impact is far higher if you become, as again, Ziegler used to say, a meaningful specific, focusing on clear, specific goals. It doesn't mean you can't use those accounts. It means that you have a plan.

The best behavioral finance guy I know is Dave Ramsey. If you look at the power of the Dave Ramsey plan for people who are in debt, where he focuses them in, laser focused on, "You're going to get out of debt." Guess what happens? People get out of debt. It works because they're focused.

One bill, one credit card, one baby step at a time. Take that same thing and fast forward it to your wealth plan. So many people would be much better served by saying, "I'm going to get my debt paid off. I'm going to get my house paid off. I'm going to get the down payment saved up for a rental house to buy.

I'm going to get this account fully funded." Much better to focus on one of those things one at a time than try to do a little bit here and a little bit there. And if you're rich, you can pay for college. So start by just having a clear plan to get rich in a short period of time, as is appropriate to your situation.

Those things are not necessarily mutually exclusive. You can work a good job. You can say, "I like this job. I'm happy with it. I'm just going to fund these accounts and do fine if you have enough time." It's not mutually exclusive, but make sure you have a clear plan and a clear focus as appropriate to you.

That kind of generalized plan, it could be personality or it could be effectiveness. I don't know. It doesn't work for me. I'm rather obviously something of an extreme guy. The reason this show is called the Radical Personal Finance Podcast. But I just find it far more effective to focus.

If you're going to work, work. If you're going to play, play. So number one, don't dilute your efforts and do a little everywhere. Have clear financial goals that are measurable. Number two, before you fund a college plan, if you at least recognize that there is at least some uncertainty with the future value of these accounts, consider some type of cash flow plan rather than a savings plan.

Here's what I mean. If I'm right about my predictions of college and things that are going to happen and the potential challenges, the limited benefits from the tax perspective, the fact that you're diluting your efforts, blah, blah, blah, all that stuff I just spent 56 minutes going over with you.

If I'm right about that thing, that stuff, then having a few thousand dollars in a college savings account is not going to be really that impactful. But if you focus on other things first, specifically having free cash flow, then if you want to just pay for college when your kids are older, you can do that.

So take that focus and focus it in on paying off your cars and not borrowing money on cars. Focus it in on paying off your credit cards and not borrowing money on credit cards. Focus it in on getting your mortgage paid off. If you arrive at the time that you have an 18-year-old heading to school and you don't have a mortgage and you don't have car payments and you don't have credit cards, even if you're just working a job, you can just simply cash flow the college benefit, the college payment.

Since there's an economic benefit to all of those things that works whether your child goes to school or not or whether they go to an expensive school or whether they get scholarships or not or any of those other factors or whether school is free or not, you're going to be better off either way.

So plan ahead and plan on a cash flow plan. Another option is just simply plan on a cash flow plan with regard to your investments. So my point number three here is fund your retirement accounts first. Please don't open a 529 account or an ESA until you have first funded fully your retirement accounts, 401ks, Roth IRAs, whatever accounts you're eligible for because it'll give you far more flexibility and you might be able to use the money for college or you can pursue the cash flow plan.

So with a Roth IRA, what I would do is first fund a Roth IRA for you and then if you want to pay for college, then just take your basis distributions tax-free out of the Roth IRA and use that to pay for college. First fund a 401k as aggressively as you can until it's full and then probably the best move would just if you have to cut your contributions to the account while your child is in school and/or cut them to at least the level of the employee match and then pay cash for the college tuition payments.

At least in those situations you have options and from a financial aid perspective you have options, your child has options, if you've encouraged your child and your child is academically excellent, you're not stuck with $15,000 in an account and say, "Well, you got to get a master's degree now." You've got the money in a retirement account, which is a little more flexible and a little bit more useful to you.

So fund your retirement accounts first. Then only after all those things are done, you got to plan to get rich, you got to plan to be debt-free. If you're going to pursue retirement accounts, those retirement accounts are fully funded and you're investing in all of your everything that you can see now that's going to help your child now, whether that's the exclusive $40,000 a year private school tuition, there's a reason you don't see the elite in our society sending their kids to local government school.

There's a reason they go off to the boarding school. It's a very different educational approach. If you're not aware of that stuff, go and research, research, research, research. But after you've done all those things, then you can consider the retirement account. And hey, good luck to you. I hope this has been useful to you.

I hope you've enjoyed it. I know I'm presenting some very strong opinions. I'm doing that because A, I hold strong opinions, but I'm also doing that simply because I'm fighting against the general tide of advice and information that comes at us in our society. And you got to see through it because otherwise the peer pressure is all around.

You're a bad parent because are you saving for your kid's college because don't you know the college tuition is going up? Most people are out of touch with the actual facts of what's going on in society. Most people are out of touch with the benefit of a college degree.

Most people are out of touch with the college degree costs. Most people are out of touch with the options. Very few people are in touch with the changing roles of many industries. There are always exceptions to all these things that I've said, but you got to recognize that most people are out of touch.

I could be out of touch. You got to be the judge of that. But go and research these things heavily. Read a book on Maria Montessori. Go and visit with your average 18 year old government school graduate and ask yourself if you want your kid to look like that.

Do some research and make an educated decision. But this is my go-to resource now as to why I refuse to save money for my kid's college. I think it's a dumb system. It's antiquated out of date. It was never that effective to begin with. I think it's a bad use of the dollar.

Too many risks and uncertainties. If you disbelieve all that stuff, hey, I got 15 or 20 hours of free stuff to tell you how to exploit all those accounts with all the loopholes and everything like that. So go search the website. Thank you all for listening. If you've enjoyed this show, let me know.

Drop me an email. Send me a comment on the show. Feel free. If you hated it, feel free to let me know that too. I don't mind that. If this has been useful to you or beneficial, please consider supporting the show on Patreon. Also consider working with our sponsors.

That's helpful. Both of those are helpful. But this is how I have the money to invest in my kids. And the primary means for that is the crowdfunded listener support method through the Patreon page. Details for that at radicalpersonalfinance.com/patron. Radicalpersonalfinance.com/patron if you would like to support the show. Thank you.

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