Three Important Financial Planning Tips to Put Your Son or Daughter in the Educational Driver’s Seat
Most parents dream of providing their children with the best education possible. However, premium primary, secondary, and post-secondary education can be costly. With average tuition costs at public universities reaching more than $22,000 annually and less than 40 percent of college students graduating within four years, the need to save additional money for education is crucial.
Here are three tips to help your family think about college funds and financially prepare for your child’s education:
1. Save Early and Start with a Plan
According to aU.S. News article, the sooner you start saving for educational expenses, the more money you will accumulate. Early savings can lead to larger college funds and eliminate some of the uncertainty surrounding your child’s educational future.
If you are a new or expecting parent, setting up a 529 plan is the perfect first step in saving for your child’s education.
A 529 plan is a savings plan created specifically for academic expenses by a state or educational institution. Designed to help families set aside funds for future college expenses, 529 plans can let contributions grow tax-deferred and be distributed income tax-free. Some states allow contributions to be partially or completely tax deductible.
Distributions from a 529 plan can be used for a variety of qualified expenses, such as tuition, fees, or room and board at higher education institutions.
2. Know How Much to Save
Knowing how much to save for your child’s education can be a challenge. Some of the different factors that families need to consider include:
- Public Institutions versus Private Institutions
- On-Campus versus Off-Campus Residences
- Expenses Related to a Major or Course of Study
At Delta Community, we have a number of college planning resources that families can use to evaluate these tough questions. Our college savings calculator can help you determine how much you should be saving for college, while factoring in inflation costs and annual increases in college tuition.
3. Take Advantage of Scholarships and Grants
If your savings come up short, scholarships and grants can assist with the cost of tuition. Encourage your child to take their schoolwork seriously at an early age. Academically prepared students are more likely to find "free money" or scholarships to help with their college expenses.
Investigate resources, such as Scholarships.com, to see if your child qualifies for any grant or scholarship money.
According to U.S. News, another resource to consider is your child’s high school guidance counselor. Many guidance counselors can help you and your child select the right university based on the amount of financial aid and scholarship money available.
When you are ready to save for your child’s education, speak to the trustworthy financial and tax advisors at Delta Community about getting the most savings for your dollar. Remember to be flexible with your savings plans and goals, since programs and investments continue to evolve. Laws and your own circumstances will continue change.
Happy financial planning!