Setting Your Child Up for Success: Why College Savings Matter
Saving for college can feel overwhelming, but it doesn’t have to be. Whether you’re a parent planning years ahead or just starting to think about your child’s future, creating a solid plan now can reduce stress later. By exploring options like 529 plans, Education Savings Accounts (ESAs), and other strategies, you can build a financial foundation that aligns with your family’s goals.
A fiduciary financial advisor can play a key role in this process. Acting in your best interest, they can help you navigate the complexities of college savings and provide personalized advice tailored to your financial situation.
Step 1: Start Early, Even If It’s Small
The earlier you start saving, the better. Thanks to compound interest, your savings have more time to grow. Even small contributions add up over time.
For example, contributing just $100 per month to a 529 plan starting when your child is born could result in nearly $30,000 by the time they turn 18 (assuming a 6% annual return).
Key Tip: Automate your contributions to make saving effortless and consistent.
Step 2: Explore Your Savings Options
529 Plans: The Popular Choice
529 plans are tax-advantaged accounts designed specifically for education savings. Contributions grow tax-free, and withdrawals for qualified education expenses (like tuition, books, and room and board) are also tax-free.
Advantages of a 529 Plan:
- High contribution limits
- Funds can be transferred to another family member if not used
- Covers more than just college, including K-12 tuition and apprenticeship programs
Education Savings Accounts (ESAs): A Flexible Alternative
An ESA, also known as a Coverdell Education Savings Account, offers similar tax benefits but with lower contribution limits ($2,000 annually per child). ESAs provide more flexibility, allowing funds to be used for K-12 expenses and college costs.
Comparing the Two:
While 529 plans are ideal for families looking to save substantial amounts, ESAs can be a great fit for those prioritizing flexibility. A financial advisor can help you weigh the pros and cons based on your unique circumstances.
Step 3: Maximize Tax Advantages and Financial Aid
Understanding the tax benefits and potential impact on financial aid is crucial when saving for college.
- Tax Advantages: Both 529 plans and ESAs offer tax-free growth and withdrawals for qualified expenses, helping your money go further.
- Financial Aid Considerations: Savings in a 529 plan are considered parental assets, which generally have less impact on financial aid eligibility compared to student-owned assets.
A fiduciary advisor can guide you on balancing your savings strategy with potential financial aid opportunities.
Step 4: Reassess and Adjust Your Plan Over Time
Life changes, and so do financial priorities. Regularly review your college savings plan to ensure it aligns with your goals.
- Has your income increased? Consider increasing your contributions.
- Are college costs rising faster than expected? Adjust your savings goals.
Step 5: Get Expert Guidance from a Fiduciary Financial Advisor
Navigating college savings options can be complex, but you don’t have to do it alone. A fiduciary financial advisor can:
- Analyze your current financial situation
- Help you choose the right savings vehicle (529, ESA, or other options)
- Create a customized plan that fits your family’s needs and goals
Their commitment to acting in your best interest ensures you’ll receive unbiased advice that sets your family up for success.
Take Action Today: Secure Your Child’s Future
The best time to start saving for college is now. Whether you’re just beginning or looking to optimize your current plan, a fiduciary financial advisor can help you create a strategy that works for you.
Call to Action:
Contact a trusted financial advisor today to begin building your child’s future with confidence. Take the first step toward creating a comprehensive college savings plan tailored to your family’s goals.
Global View Capital Management (GVCM) is an affiliate of Global View Capital Advisors (GVCA). GVCM is a SEC Registered Investment Advisory firm headquartered at N14W23833 Stone Ridge Drive, Suite 350, Waukesha, WI 53188-1126. 262.650.1030. Ryan Peca is an Investment Adviser Representative (“Adviser”) with GVCM. Additional information can be found at www.adviserinfo.sec.gov Global View Capital Insurance Services (GVCI) is an affiliate of Global View Capital Advisors (GVCA). GVCI services offered through Experior Financial Group, ASH Brokerage, and/or PKS Financial. GVCI is headquartered at N14W23833 Stone Ridge Drive, Suite 350, Waukesha, WI 53188-1126. 262-650-1030. Ryan Peca is an Insurance Agent of GVCI.
These views do not necessarily represent the views of GVCM or any of its affiliates. Investment involves risk.