Budget Planner Help Examples - Table of Contents Index
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Example 3

Planning for college expenses

This example shows how to plan for four years of college expenses for your child.

How To: Plan for four years of college expenses
  1. Use the plan from example 2. If you saved that plan in a file, use the File > Open Recent menu command to open the previous plan. If you did not save the plan from the previous example, you should do that example first then continue with this example.
  2. Change the Name of the plan to "College Plan".
  3. Change the Description of the plan to "Plan to purchase a new car and send my child to college."

Your child is now 5 years old and will be entering college in 13 years. The first thing we want to do is change the length of the plan to cover the total time frame so lets enter 20 in the plan Years field. In this plan we were saving $250 per month, and since we assume we will be continuing that for the entire length of the plan, change the plan Months to be 240. Next, we have an event that happens in two years with the loan pay off. Click that event on the graph to make it the current event and change the event Months to 216 (20 years minus 2 years).

Now we need to enter the college costs. In this example we will do that as an event for each of the 4 college years. We assume we will need $10,000 per year to cover tuition and expenses. In the event box click New and enter a date 13 years from today. Enter a negative $10,000 (its an expense) in the Amount field, put 1 in the Months field, 5% in the Interest field, and 3% in the inflation field. The interest and inflation are our assumptions as to what the economy will be like then. Put "First year college expense" in the event Description.

Click New and repeat the above step creating events for each of the next 3 years. If you think the interest or inflation rates will change, change them also. When you are all done adding the events check the graph, still above the $0.00 line? Yes, congratulations!

When done, if you have registered Budget Planner you can save the plan in a file for future use. We will be using this plan in the next example.

Note: This plan is based on quite a few assumptions.
  1. You will be able to continue saving $250 per month.
  2. You will have the loan paid off and be able to save an additional $212.50 per month.
  3. You will acquire no new debt.
  4. The interest and inflation rates will be as you guessed.
  5. The cost of the car and college will increase equal to the rate of inflation.
  6. No other events change your financial situation.

Move on to example 4.