Savings Creates Choices
If you ever hear the advice, “You’ll get more financial aid if you don’t save for college,” I hope a wrong-answer buzzer goes off in your head.
Maximize Your Options Through Saving for College
Too many families get hung up on the calculators telling them that based on college cost inflation, they need to save perhaps $1,000 per month per child to be able to pay for college. That’s not realistic, and for many families it’s so far from realistic that they throw up their hands in despair and quit before they’ve even started.
The following sections will get into “How Much to Save” and “Saving Options.” My College Financial Plan Masterclass shares workbooks and resources to capture and build your college budget and financial plan. Having this information centralized will prepare you to have an informed “talk” with your student about your budget, and your expectations for their role in paying for college. This is an essential step to inform their college research so their research is grounded on a financial foundation.
How Much to Save
Data shows that students whose families have saved for college – even very small amounts – enroll in and graduate from college at higher rates than those who don’t.
As important as college is for many families, it’s only one of your family’s financial priorities. Retirement, emergency savings, buying a house, and even just managing a household budget are among the many draws on your dollars. If you don’t have an emergency savings fund or you aren’t saving for retirement, those need to be priorities before saving for college.
Learn more about:
Why make saving for college a priority in addition to saving or your retirement
How to balance college savings with retirement planning and my two “rules of thumb”
When and how to start?
Saving Options
If you want your children to go to college, you need to save. Period. That’s the easy part. Harder is where and how much.
529s are the most popular savings and often times most compelling vehicle, but other options exist that you may be considering including Coverdell ESA, Bonds, & Roth IRAs.
People worry that they’re going to lose out on financial aid if they save. Truth is that saving for college gives your students more choices for the small amount of financial aid you potentially give up.
Deepen your understanding of:
529s and other popular college savings instruments including Coverdell ESAs and Bonds
What about Roth IRAs?
How to set yourself up for success and what to avoid
Building a College Plan
Planning puts you in control. It helps you achieve your goals, and gives you framework to guide your student. The earlier you plan, the greater the range of future choices you will afford for your student.
Developing a college budget is foundational to building a college plan. Through my College Financial Plan Masterclass, I’ll walk you through how to develop your college budget. The online, self-paced e-course includes a comprehensive but easy to fill out Excel workbook that includes:
College Savings Estimator
Affordability worksheets
Tools to prepare you for a productive "talk” with your student
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