Published January 12, 2012
| Motley Fool
Looking back on my childhood, one of the greatest lessons I learned early in life was the value of a dollar and how to work for a dollar.
My first job was collecting aluminum cans that I would take to the local recycling facility for a few bucks in return. As an entrepreneurial young man, I even had my parents, my grandparents, and a few neighbors in on the racket. Can collecting didn't pay a lot -- maybe $8 or $10 every couple of weeks -- but every cent I earned went into a savings account my grandpa opened for me.
By age 8, I knew how to fill out a deposit slip, knew how to read my bank statement, and (though I may not have realized it at the time) was on my way to building a financial foundation a few dollars at a time.
By 12, I increased my earning potential when I got a regular route as a paperboy that had me rising (sleepily) at 5 a.m. seven days a week. At that age, the $250 a month I earned was a fortune -- one that could have bought lots of baseball cards, candy, or games at the arcade. But every month before I got the chance to waste it, $200 went straight into a Fidelity mutual fund for the sole purpose of saving for college.
During the next six years, I invested about $14,000 in that college savings account and watched my money grow to more than $20,000 by the time I graduated high school.
Today, I know what a daunting task it is to pay for college. But it's not impossible -- even on a paperboy's salary. I did it, and hopefully some of what I learned on the route from paperboy to college graduate will help inspire you, your kids, or your local paper carrier.
Stay Invested -- Psychologically and Financially
One of the reasons I was so engaged in my own future was that it was my money -- my future opportunities -- on the line. I treated my savings and my education differently because I worked hard to earn that money -- it was mine in every sense.
The same money, had it simply been given to me, would not have had the same meaning. Kids can start simple jobs like paper routes, mowing lawns, and shoveling snow at an early age, and learn about what it takes to earn a dollar.
Don't Give Yourself the Chance to Blow the Money
A lot of people say, "I'll save everything I have left over," but at the end of the month there never seems to actually be any leftovers. If you take the savings out first, you're much more likely to make it a priority in your monthly budget. That's what happened when I moved my paper route money directly into my college fund. It made it seem that the money was never mine to spend in the first place.
Set a goal like putting $100 per month in a mutual fund for college. Or start with a bigger goal -- for example, saving $10,000 by the time a child is 12 -- and work your way backward to come up with a monthly sum you can sock away. Then track progress and add or subtract from your monthly savings accordingly.
Keep Your Money Safe by Spreading It Around
I got lucky with my investments. For most of my youth, I owned one stock and one mutual fund. But I learned quickly after I got to college just how fast that money can evaporate when you aren't diversified. During my freshman year, the Internet bubble popped, tech stocks crashed, and a chunk of the money I had saved evaporated.
Keeping money diversified is a much better way to invest, whether it's in stocks, mutual funds or index funds. As college nears, moving into safer investments like bonds or savings accounts is a wise move as well.
Coming Up Short Does Not Mean Failure
Saving for college isn't an all-or-nothing endeavor. I was able to pay for most of my college education with savings and paid for most of my living expenses by working during the week. But I still graduated from undergrad with student loans.
That's not a bad thing. You shouldn't give up just because you don't have the money to cover every single expense before you set off for school. Just remember that every dollar you save before you go to college is a dollar that won't be a burden after college.
Every Single Small Step Counts
In my case, as in most others, paying for college doesn't happen overnight. It's paid for one step at a time. Remember those dollars I earned every few weeks collecting cans? By the time I was 13, it had turned into a couple thousand dollars. Then I took that money and made my first foray into the stock market.
I'll admit the timing was lucky, and so was my pick of Medtronic (MDT) as an investment. But the experience taught me even more important lessons -- compound interest and saving and investing early -- that serve me well to this day.
Motley Fool contributing writer Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool and check out his personal stock holdings. The Motley Fool owns shares of Medtronic.
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