Financially preparing for higher education
DELMARVA – It’s no secret the price of education is getting more expensive. That’s why having a solid financial plan for your child’s future is more important than ever.
Federal student loan payments are set to resume, leaving many families and individuals figuring out how to budget for it. However, avoiding those types of payments in the future is possible through strategic financial planning.
Elizabeth Paal Goss, a Certified Financial Planner™ professional at Heritage Financial Consultants in Maryland and Advisory Representative of Lincoln Financial Advisors, Member SIPC tells 47 ABC, you have to start small. Families should look at their budget, and determine how much they can set aside each month for a college fund, even if it’s just five dollars. If that’s not doable, Paal Goss recommends considering setting small portions of tax returns, birthday, or Christmas money.
A good option for building that education fund is the 529 plan; an investment account that offers tax benefits when used to pay for educational purposes. “Think of it putting the money into the plan almost as an IRA because you’re using after-tax dollars and it’s going to grow tax-free if you’re using it for an education expense,” says Paal Goss. She goes on to say, “But for example say you have a three-year-old, you have 15 plus years to let the compounding of the dollar work on your benefit, instead of just sitting in a bank account and not earning probably anything. That money can work for you and will be a larger sum to use for education expenses down the road.”
However, to even begin planning, Paal Goss says you should constantly check on the cost of college whether in-state or out-of-state. Between books, room and board, transportation, and a multitude of other expenses, that price tag will only increase. So starting sooner rather than later will prevent you and your child from incurring large student loans you could be paying off for years to come. “As a kid is approaching college age junior, senior year, apply for student aid, financial aid, look for work-study programs, scholarships, grants, whatever you can do to help offset some of those costs.”
Paal Goss also says speaking with a financial consultant is a great first step. You can better look at where you have wiggle room in your budget to begin setting aside money for what’s inevitable for many families looking at higher education.
Elizabeth Paal Goss is a registered representative of Lincoln Financial Advisors Corp. Securities and advisory services are offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC) and registered investment advisor. Insurance is offered through Lincoln affiliates and other fine companies. Heritage Financial Consultants is not an affiliate of Lincoln Financial Advisors. CRN-5699255-052223
