Top College Financial Planning Mistakes Parents Make and How to Prevent Them
Introduction
As the cost of higher education continues to rise, college financial planning has become a crucial aspect of parents' lives. However, many parents make mistakes that can negatively impact their child's college experience. In this blog post, we will discuss the top college financial planning mistakes parents make and how to prevent and correct them.
10 College Financial Planning Mistakes Parents Make
- Procrastination: Waiting until the last minute to start planning for college can lead to missed opportunities and increased stress. Parents should begin planning as early as possible, ideally when their child enters high school2.
- Raiding their own retirement accounts: Parents may be tempted to use their retirement savings to pay for their child's college education. However, this can have long-term consequences, such as reduced retirement income1.
- Not understanding the Expected Family Contribution (EFC): Parents should understand the EFC, which is the amount of money the government expects a family to contribute to their child's college education. This can impact the amount of financial aid a student is eligible for2.
- Not saving early enough: Starting a college savings plan as early as possible can take advantage of compound interest and make college more affordable in the long run5.
- Not considering all available financial aid options: Parents should research and apply for all available financial aid options, including grants, scholarships, and student loans3.
- Not involving their child in the financial planning process: Parents should include their child in the financial planning process to help them understand the importance of financial responsibility and the costs associated with college4.
- Not creating a realistic college budget: Parents should create a budget that includes all expected college expenses, such as tuition, room and board, and books3.
- Not considering the impact of student loans: Parents should be aware of the potential long-term consequences of taking on too much student loan debt, such as reduced credit scores and limited financial opportunities3.
- Not considering the impact of savings and investments: Parents should consider the impact of their savings and investments on their child's financial aid eligibility2.
- Not considering the impact of retirement savings: Parents should consider the impact of their retirement savings on their child's financial aid eligibility2.
How to Prevent and Correct These Mistakes
- Start planning early: Parents should begin planning for college as early as possible, ideally when their child enters high school2.
- Save early and often: Starting a college savings plan as early as possible can take advantage of compound interest and make college more affordable in the long run5.
- Understand the EFC: Parents should understand the EFC and how it impacts their child's financial aid eligibility2.
- Research and apply for all available financial aid options: Parents should research and apply for all available financial aid options, including grants, scholarships, and student loans3.
- Involve their child in the financial planning process: Parents should include their child in the financial planning process to help them understand the importance of financial responsibility and the costs associated with college4.
- Create a realistic college budget: Parents should create a budget that includes all expected college expenses, such as tuition, room and board, and books3.
- Consider the impact of student loans: Parents should be aware of the potential long-term consequences of taking on too much student loan debt, such as reduced credit scores and limited financial opportunities3.
- Consider the impact of savings and investments: Parents should consider the impact of their savings and investments on their child's financial aid eligibility2.
- Consider the impact of retirement savings: Parents should consider the impact of their retirement savings on their child's financial aid eligibility2.
- Seek professional advice: Parents should consider seeking professional advice from a financial advisor or college planning expert to help navigate the complex world of college financial planning2.
Conclusion
College financial planning is a crucial aspect of a child's education, and parents should be aware of the common mistakes that can negatively impact their child's college experience. By starting early, saving often, understanding the EFC, researching and applying for financial aid options, involving their child in the financial planning process, creating a realistic college budget, considering the impact of student loans, savings and investments, and retirement savings, and seeking professional advice, parents can prevent and correct these mistakes and help their child achieve their educational goals.
Meet
Alex Austin
Hello there šš¼ Iām Alex Austin a CERTIFIED FINANCIAL PLANNERā¢ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a clientās financial life so they can reach their financial and retirement destination with the most efficient and optimal route.Ā
References
- The Balance Money. (2022, November 23). 10 College Financial Planning Mistakes Parents Make. Retrieved from https://www.thebalancemoney.com/top-college-planning-mistakes-made-by-parents-795260
- Total Wealth Planning. (n.d.). College and Private Education Planning. Retrieved from https://twpteam.com/financial-planning/college/
- SouthState Bank. (2023, August 15). Setting Up for Success: College Financial Planning Tips for Parents. Retrieved from https://www.southstatebank.com/personal/stories-and-insights/setting-up-for-success-college-financial-planning-tips-for-parents
- Financial Synergies. (2023, August 16). Financial Tips for Parents of College-Bound Children. Retrieved from https://www.finsyn.com/financial-tips-for-parents-of-college-bound-children/
- US News & World Report. (2024, January 29). 5 Ways Parents Can Do College Financial Planning. Retrieved from https://www.usnews.com/education/best-colleges/articles/ways-parents-can-do-college-financial-planning
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation.Ā Information was obtained from sources believed to be reliable but was not verified for accuracy.Ā It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.Ā
Savvy Wealth Inc. is a technology company.Ā Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as āSavvyā.Ā All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth.Ā The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
Top College Financial Planning Mistakes Parents Make and How to Prevent Them
Introduction
As the cost of higher education continues to rise, college financial planning has become a crucial aspect of parents' lives. However, many parents make mistakes that can negatively impact their child's college experience. In this blog post, we will discuss the top college financial planning mistakes parents make and how to prevent and correct them.
10 College Financial Planning Mistakes Parents Make
- Procrastination: Waiting until the last minute to start planning for college can lead to missed opportunities and increased stress. Parents should begin planning as early as possible, ideally when their child enters high school2.
- Raiding their own retirement accounts: Parents may be tempted to use their retirement savings to pay for their child's college education. However, this can have long-term consequences, such as reduced retirement income1.
- Not understanding the Expected Family Contribution (EFC): Parents should understand the EFC, which is the amount of money the government expects a family to contribute to their child's college education. This can impact the amount of financial aid a student is eligible for2.
- Not saving early enough: Starting a college savings plan as early as possible can take advantage of compound interest and make college more affordable in the long run5.
- Not considering all available financial aid options: Parents should research and apply for all available financial aid options, including grants, scholarships, and student loans3.
- Not involving their child in the financial planning process: Parents should include their child in the financial planning process to help them understand the importance of financial responsibility and the costs associated with college4.
- Not creating a realistic college budget: Parents should create a budget that includes all expected college expenses, such as tuition, room and board, and books3.
- Not considering the impact of student loans: Parents should be aware of the potential long-term consequences of taking on too much student loan debt, such as reduced credit scores and limited financial opportunities3.
- Not considering the impact of savings and investments: Parents should consider the impact of their savings and investments on their child's financial aid eligibility2.
- Not considering the impact of retirement savings: Parents should consider the impact of their retirement savings on their child's financial aid eligibility2.
How to Prevent and Correct These Mistakes
- Start planning early: Parents should begin planning for college as early as possible, ideally when their child enters high school2.
- Save early and often: Starting a college savings plan as early as possible can take advantage of compound interest and make college more affordable in the long run5.
- Understand the EFC: Parents should understand the EFC and how it impacts their child's financial aid eligibility2.
- Research and apply for all available financial aid options: Parents should research and apply for all available financial aid options, including grants, scholarships, and student loans3.
- Involve their child in the financial planning process: Parents should include their child in the financial planning process to help them understand the importance of financial responsibility and the costs associated with college4.
- Create a realistic college budget: Parents should create a budget that includes all expected college expenses, such as tuition, room and board, and books3.
- Consider the impact of student loans: Parents should be aware of the potential long-term consequences of taking on too much student loan debt, such as reduced credit scores and limited financial opportunities3.
- Consider the impact of savings and investments: Parents should consider the impact of their savings and investments on their child's financial aid eligibility2.
- Consider the impact of retirement savings: Parents should consider the impact of their retirement savings on their child's financial aid eligibility2.
- Seek professional advice: Parents should consider seeking professional advice from a financial advisor or college planning expert to help navigate the complex world of college financial planning2.
Conclusion
College financial planning is a crucial aspect of a child's education, and parents should be aware of the common mistakes that can negatively impact their child's college experience. By starting early, saving often, understanding the EFC, researching and applying for financial aid options, involving their child in the financial planning process, creating a realistic college budget, considering the impact of student loans, savings and investments, and retirement savings, and seeking professional advice, parents can prevent and correct these mistakes and help their child achieve their educational goals.
Meet
Alex Austin
Hello there šš¼ Iām Alex Austin a CERTIFIED FINANCIAL PLANNERā¢ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a clientās financial life so they can reach their financial and retirement destination with the most efficient and optimal route.Ā
References
- The Balance Money. (2022, November 23). 10 College Financial Planning Mistakes Parents Make. Retrieved from https://www.thebalancemoney.com/top-college-planning-mistakes-made-by-parents-795260
- Total Wealth Planning. (n.d.). College and Private Education Planning. Retrieved from https://twpteam.com/financial-planning/college/
- SouthState Bank. (2023, August 15). Setting Up for Success: College Financial Planning Tips for Parents. Retrieved from https://www.southstatebank.com/personal/stories-and-insights/setting-up-for-success-college-financial-planning-tips-for-parents
- Financial Synergies. (2023, August 16). Financial Tips for Parents of College-Bound Children. Retrieved from https://www.finsyn.com/financial-tips-for-parents-of-college-bound-children/
- US News & World Report. (2024, January 29). 5 Ways Parents Can Do College Financial Planning. Retrieved from https://www.usnews.com/education/best-colleges/articles/ways-parents-can-do-college-financial-planning
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation.Ā Information was obtained from sources believed to be reliable but was not verified for accuracy.Ā It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.Ā
Savvy Wealth Inc. is a technology company.Ā Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as āSavvyā.Ā All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth.Ā The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
