Saving For College: A Holistic Approach
Many of us cringe at the thought of paying for college. The costs are continuously rising, making it a significant financial challenge for many families. Whether it’s a private university, public college, or trade school, arranging for college expenses requires careful planning. The key is balancing this goal with other financial priorities, such as retirement savings. At North Main Financial, we emphasize that there is no one-size-fits-all answer to this challenge, but here are a few considerations.
Balancing College and Retirement Savings
A common mistake is prioritizing college savings at the expense of retirement savings. While it’s admirable to want to cover all college expenses, it’s crucial to think about financial planning in a multi-faceted way. For instance, aggressively saving for college might mean diverting funds from your 401(k) or other retirement accounts, which can jeopardize your financial security later in life.
Consider the case of a client who had children later in life. As their kids approached college age, the parents were nearing retirement. Shifting funds from retirement savings to college expenses would have significant implications for their future. We worked together to find a balanced approach, allowing them to save for both goals simultaneously.
Setting Realistic College Savings Goals
For many families, covering all college expenses upfront is not feasible. It’s important to set realistic goals and explore other funding options, such as grants, scholarships, and student loans. Don’t be discouraged by the high costs of college. Instead, focus on what you can realistically save and plan accordingly.
For example, decide on a specific amount you can contribute towards your child’s education. The rest can be managed through part-time work, scholarships, grants, or loans. This way, you maintain a balanced financial plan without compromising other savings goals.
Exploring All Funding Opportunities
When planning for college expenses, always explore grants, scholarships, and loans – in that order. Grants and scholarships are ideal because they do not require repayment, whereas loans do.
We had a client whose child was accepted to an expensive private school beyond their financial means. By thoroughly researching and applying for every available grant and scholarship, they secured nearly 20 different scholarships. This significantly reduced their out-of-pocket expenses and reliance on student loans.
With the wealth of information available online, finding and applying for scholarships has never been easier. Even smaller awards, like $500 or $1,000, can add up and reduce the financial burden.
In Conclusion
- Prioritize Retirement Savings: Ensure you’re not neglecting your retirement savings while planning for college expenses. Balance is key.
- Set Realistic Goals: Covering all college expenses isn’t always possible or necessary. Set attainable goals that fit within your financial means.
- Exhaust All Funding Opportunities: Research and apply for grants and scholarships first, then consider loans if necessary.
The thought of saving for college can be daunting, but you don’t have to do it alone. Consult with your tax advisor or financial planner to get a comprehensive view of your financial situation and future plans. By taking a balanced, informed approach, you can navigate the complexities of funding education while maintaining overall financial health.
If you have questions about your financial space, call us at (704) 987-1425 or visit us virtually at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Osaic Wealth.
