Paying for college is a big expense for any family, and most are left on their own to figure out how to do this. But by engaging with professionals in this endeavor, you help ensure the most success possible. One financial pro that should be on your college prep team is a financial consultant. Here are a few ways they can help both you and your future student.
1. To Find the Best Savings Strategy
Only by understanding the variety of choices you have can you find the right one. Should you save in taxable accounts, invest in real estate, use state 529 plans, use a retirement vehicle such as a Roth IRA, or tap credit lines? Each of these strategies works in different ways and has different tax effects, so you need to analyze all of them.
2. To Avoid Forgetting Your Own Needs
Parents who want to give their children a good start in life often put their own needs in second place. But your own finances — and even those of your children — can be put at risk if you fail to provide a solid financial base for yourself and for your retirement. A financial consultant looks at the big picture to help you find a way to save both for college and for your own future.
3. To Help Your Student Make a Financial Plan
When you meet with a financial consultant and talk frankly about money, involving your future student helps them learn good money management. They will understand what is available for their education. It may help them analyze the financial potential of various majors or degree plans. And the financial consultant can help them start to form their own lifelong strategy.
4. To Adjust Your Plans Over Time
A good college savings strategy today may not be a good strategy in 10 years. Lower tax rates now may make a taxable account better than a tax-advantaged one. You may opt to sell that real estate investment before a downturn in the market. Or you may simply not see the returns on your investments that you expected. Whatever the changes, regularly reassess the plan.
5. To Prepare for Contingencies
Finally, your savings strategy needs to account for different possible outcomes. What will you do if tax rates go up or down? How might a recession or an economic boom change how you invest? What if your child chooses a longer or shorter degree program? Discuss all these with your consultant so you aren't trying to play catch-up later.
Clearly, a financial consultant can be of benefit to help find your ideal savings plan as well as to regularly check in on it to see how you're doing. The result will be more funding to get your child started in life and a more stable financial picture for parents. Learn more by making an appointment with a financial consulting professional today.