Back to School Planning
Evan Henderson, CFP?
Financial Planner helping people grow their wealth by making the most of their income
It is that time of year for back-to-school shopping and planning! Summer is coming to an end and kids are going back to school for the year, including returning to their college campuses or moving in for the first time. This time of year may have you thinking, “What do I need to save for the future to help my kids with college?” or maybe you are thinking, “I sure am happy I saved the way I did to pay for this college experience!”
There are multiple vehicles for saving for college – A good ole fashioned savings account or Savings Bonds, 529 Savings Plan, 529 Pre-Paid College Tuition Plan, Coverdell Education Savings Plan and Custodial Investment Account are the main options. (See Summary Below)
Once the decision has been made for what kind of account you are going to put the money into, you might be asking, “Well, how much should I be saving?” or “How do I know how much my kid is going to need when they go off to college?”
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According to Business Insider, the current Annual Cost of a 4 Year Public in State College – ~ $22,690 for Tuition, Room & Board. Let us assume the cost of college goes up by 5%/year. In 10 years, it will cost $33,701. In 15 years, it will cost $43,013. If you are starting to save now, in order to fund your kid’s 4 years of college in 10 years you would need to save $931/month (Assuming you make 5% per year on your monthly savings).
This may seem daunting but it doesn’t have to be. The hardest part is always getting started. Take advantage of when time is on your side. There is no time like the present to get started! If you are not sure how to get started, lets talk!
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