Money Tips for Parents of Children Ready for College

Since the day your child was born, the cost of college has likely been in the back of your mind and at the forefront of your savings plans. While that day when they leave the nest has always seemed to be part of the distant future, time has a way of quickly slipping through your fingers like sand. As your child’s college years rapidly approach, Edward Jones offers these six helpful financial considerations to keep in mind:

1. Keep saving. Remember, freshman year is just the beginning of an advanced educational journey that will last for four years or longer. Even after your child enrolls in collegiate courses, you can continue to contribute to education savings accounts within limits.

2. Know your taxes. Withdrawals from a 529 college savings plan come tax free, while earnings from your investment portfolio are taxed at the usual rate. Depending on your income, a 529 plan may impact your financial aid.

3. Explore financial aid. Speaking of financial aid, be sure to fill out all necessary forms, including the Free Application for Federal Student Aid (FAFSA). The government offers a number of resources on federal student aid, including a FAFSA4caster to help you understand your options for paying for college.

4. Consider your payment options. Check with your child’s school to see if payment plans or electronic withdrawals are offered.

5. Develop a budget. Odds are good that you can’t afford to pay for your child’s entire education, and part of teaching your child responsibility likely includes summer jobs and a part time job throughout the school year. At the same time, the goal is to prevent your child from having a massive financial hole to climb out of when school is finished. Have open communication with your child to find the right balance for your family.

6. Don’t forget your retirement goals. With your child out of the home, you have one less mouth to feed. Other living expenses may be altered as well. Talk with a financial adviser to map out your new savings goals in anticipation of your approaching golden years.