Education planning: why you should start saving today
In every U.S. state, the average earnings of college graduates exceed earnings of those who did not participate in postsecondary education. But, higher education exemplifies something much more to many families—it represents a future of infinite potential.
If you have children, grandchildren, nieces or nephews, you’ve likely spent time picturing their future. Though a solid education may put them on track toward their dreams, it can also leave them in debt, with the average student loan balance at $35,359 per borrower (Orion Advisor Solutions). Luckily, families that create an education plan will be better prepared.
What is an education plan?
An education plan is simply a roadmap that will guide how you fund future education expenses. It outlines your future objectives, current and projected financial requirements and a range of savings and investment tactics to help you make progress along the way.
But the reality is, education planning is not just about you and what you want for your loved ones; the next generation in your family likely has educational dreams of their own. And with the right approach to savings, your children’s dreams can become a reality. Their future depends on the choices you make with your money today.
How do I get started?
Although the details of every household’s financial state are different, there are some activities that everyone should take. As with any large financial decision, understanding your budget and how much you can save toward education needs to be addressed at the onset. You likely have other investments, like a retirement plan through your employer, and funding future education may require extra savings beyond the amount you’ve already set aside.
After you understand your budget, make sure to write down your funding goals and needs. Tracking your progress will help not only hold you accountable but will also help you save for the less obvious costs that still need consideration. Will your child live on campus? Do they need a budget for meals or transportation? Will they need insurance coverage? These expenses can add up quickly, so it is important to start projecting what these expenses may be in order to properly fund them.
What if my circumstances change?
Much like any plan, flexibility will be necessary; the future is unknown, and the best plans are those that can adapt when put to the test. Your child’s dream school may change, or you may need to reprioritize spending and saving for a time. Make room in your roadmap for the unexpected, so you can continue to invest in an education plan if your circumstances change.
It’s also important to keep in mind that self-funding your next generation’s postsecondary education is not your only option. Even if you start saving when your child or grandchildren is born, inflation may mean that you won’t have all the funding required once it is time for college. Paying for college can require several strategies like combining savings with applicable scholarships or applying for loans.
Ready to get started with your education plan?
If you’ve been saving for college costs but don’t have confidence that you’re going to reach the quantity you want for your next generation, it may be time to talk to a professional who can help you prioritize your savings to ensure you get as close to your ideal number as possible.
Contact a Baker Tilly Wealth Management professional today.
Baker Tilly Wealth Management, LLC (BTWM) is a registered investment advisor. BTWM does not provide tax or legal advice. BTWM is not an attorney. Estate planning can involve a complex web of tax rules and regulations. Consider consulting a tax or legal professional about your particular circumstances before implementing any tax or legal strategy. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought.
Baker Tilly Wealth Management, LLC is controlled by Baker Tilly Advisory Group, LP. Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. ©2024 Baker Tilly Wealth Management, LLC
