It’s never too early to start financial planning for your child’s future.
If you have or are planning on having children, there are 4 main categories people fall into when it comes to college education funding.
- I need to save a little bit every month for these next years so that my child has college paid-for.
- I don’t know if I can afford to pay for college without jeopardizing my own retirement savings.
- Paying for college? I had to pay my own way – so should they!
- I make enough money so that I can pay for it out of my income when the time comes.
How can you improve in each scenario?
- If you want to save for college, but want to do it as efficiently as possible, there’s ways to save on some of your state taxes. Likewise, your invested money can grow tax free, and any withdrawals for education are tax free as well.
- The big question comes down to – how much is enough? What happens with the money if my child gets a scholarship or goes to a college that is cheaper than expected?
- What investments are appropriate for these accounts? Should we reduce our risk as we get closer to college?
- “You can borrow for college, but you can’t borrow for your retirement”. This hits home for many people who want to help their children with college costs, but don’t know if they can afford it.
- If I put away “$x per month” can I still retire on my own terms?
- What happens if I only partially fund their education, can they still get loans? Should I co-sign them?
- “I had to pay my own way” This is not uncommon and parents want to make sure their kids don’t become entitled. “Bank of Mom & Dad” doesn’t always have unlimited funds.
- If they do a good job and you have a change of heart, is there a way to gift them money later to pay off loans they took out themselves?
- If your paycheck is large enough to pay $10k, $30k, or $50k in tuition per year, then you may not have even considered “putting away” money for college.
- If you pay for costs out of your income, could you still save $950 in state taxes?
If you have any of these questions above, you are not alone.
Many people have to make decisions on what to do with college savings and how to do it. If there was a way to have more certainty, and save more on your taxes, would you do it? Schedule a call or meeting below to do both.
Woodfield Financial Advisors