Parents helping their children with schoolwork. BECU Investment Services logo.

Seven Ways To Help You Financially Prepare for Higher Education

Share

Check the background of investment professionals associated with this site on FINRA's BrokerCheck.

As a parent or guardian, one of the most significant concerns is ensuring that your children have the financial resources they need to pursue higher education. With tuition costs continuously rising, it's no surprise that many parents and guardians stress about their children's future high education expenses. It is never too early to start planning and saving or changing spending habits to prepare for education expenses.

1. Start Saving Early

The best way to ensure you have enough funds for your children's higher education is to start saving as early as possible. Thinking about higher education expenses when your children are still young may seem unusual. However, the earlier you start, the more time you have to save and plan. Even small contributions can add up over time and make a significant difference in covering the cost of higher education. Here are some education savings strategies to consider:

529 Plans

529 plans are tax-advantaged savings plans designed to save and pay for education. There are two types:

  • Education savings plans — Education savings plans grow tax-deferred, and withdrawals are tax-free when the monies are used for qualified education expenses.
  • Prepaid tuition plans — Prepaid tuition plans allow the account owner to pay today's tuition rates for future attendance at a college or university.

Coverdell Education Savings Account

A Coverdell Education Savings Account, also known as an Education Savings Account (ESA), is a tax-deferred account where earnings and distributions are tax-free as long as the funds are used for educational purposes.

2. Cut Unnecessary Expenses

Look at your current monthly expenses and identify areas to cut back. It could be as simple as eating out less, canceling unused subscriptions, or finding more budget-friendly entertainment options. You can free up extra cash for your children's higher education fund by cutting unnecessary expenses.

3. Create a Budget

Creating a detailed monthly budget can help you track your spending and identify areas where you can save. Ensure you include all your expenses, including groceries, utility bills, and other necessary expenditures. Stick to your budget and find ways to save even more each month.

4. Consider a Side Hustle

In addition to cutting expenses, you can also look for ways to increase your income. Consider taking on a part-time job or picking up a side hustle. Many people have found extra income by freelancing, selling items online, or providing tutoring or pet-sitting services. The extra income can go a long way in supplementing your children's higher education fund.

5. Explore Financial Aid Options

Feel free to explore all available financial aid options. Your children can apply for numerous scholarships, grants, and loans to help cover their higher education expenses. Many schools also offer work-study programs that allow students to earn money while studying.

6. Involve Your Children

It's essential to involve your children in the conversation about higher education expenses. Let them know the realities of the costs and the importance of planning and saving, and encourage them to research and apply for scholarships and grants to help mitigate their financial burden.

7. Consider Alternative Pathways

Lastly, it's essential to remember that there may be better options than a traditional four-year college for your children. Consider a trade or vocational school that offers specialized training and qualifications that may lead to well-paying jobs.

In conclusion, paying for your children's higher education can seem daunting, but it is achievable with planning and changes to your spending habits. By starting early, cutting unnecessary expenses, creating a budget, and exploring financial aid options, you can alleviate some of the financial burdens of college. Remember to involve your children and consider alternative pathways if necessary. With these tips, you can help set your children up for a productive and independent future.

Talk to a Financial Advisor

Financial advisors at BECU Investment Services can help make a college savings plan and provide guidance to help you and your family prepare for the future. Our team will take the time to get to know you, understand your goals and wishes to help build a plan and implement a financial and retirement strategy that's appropriate for you. Set up a complimentary consultation or call 206-439-5720 today.

For more resources or to stay up to date on market updates follow BECU Investment Services on social media: LinkedIn; Facebook

Sources:
https://money.usnews.com/money/personal-finance/articles/ways-to-save-for-your-childs-college-education
https://www.investopedia.com/terms/1/529plan.asp

Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which college plan(s) may be appropriate for you, consult your financial professional.

Prior to investing in a 529 Plan, investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. BECU and BECU Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using BECU Investment Services, and may also be employees of BECU. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, BECU or BECU Investment Services. Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency
Not Credit Union Guaranteed
Not Credit Union Deposits or Obligations
May Lose Value

Your Credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services.

Please read the LPL Financial Relationship Disclosure for more detailed information.

The LPL Financial registered representatives associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.

LPL Tracking #552474