It’s that time again—back to school. Is college looming in the near future? Are you prepared? Perhaps you don’t think too much about college funding because your children are still young. As with anything else, that time can creep up before you know it. The sooner you start saving, the more your money can do some of the work for you—oh, the power of compounding! That means less is needed to come directly out of your pocket.
But … how much can you afford to save for your children’s college education without jeopardizing your own retirement security? There are no grants or loans for retirement (darn it). It is crucial to view college savings as a piece of your financial puzzle and evaluate how that goal impacts other areas of your financial life. Then you can make informed decisions.
If your child is a junior or senior in high school, college is right around the corner. Which colleges should your child apply to? Finding the most fitting college for your child can be as important as the financing part. Students often take six years to complete a four-year degree due to a change in their major, a transfer to another college, etc. That increases the out-of-pocket cost.
Oh yes, the cost. Please gain an understanding of the colleges you and your child can afford to apply to before plans are set in motion. For some, cost isn’t an issue. It is for most people and they therefore need to prioritize goals. We see too many times cases where the parents are deep in the hole going into retirement or the child is as they start their independent lives. Financial aid may help but it might not. Or it’s only made up of federal loans that have to be paid back with interest. Perhaps your child can help defray some of the costs by working summers and possibly during the school year.
Understanding what you can afford to pay for college without unrealistic trade-offs is key to prioritizing your goals for your and your child’s financial well-being.
Cindi Turoski is a managing member of Bonadio Wealth Advisors based out of our Albany, NY office.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.