Have you ever had one of those moments when you realize you've been offering sound advice to others for years without truly experiencing the emotional weight of their situation?
My daughter recently turned 17, and to celebrate this milestone, we decided to take a family trip to California to explore potential colleges. It dawned on me that it was my turn to face-saving for our children's college education head-on and have some candid conversations with her and my wife, Jamie. Questions loomed:
o Does she aspire to attend college?
o Which school aligns best with her interests?
o What's our financial capacity for her education?
o What makes the most sense for our family?
As a Private Wealth Advisor in Sandy Springs, GA, I've diligently contributed to a 529 College Savings Plan for Stella since she received her Social Security number. Although the contributions weren't substantial, the regularity of these deposits has been key because, as they say, time is money. This fund has grown tax-free, both federally and at the state level, for me. When the time comes to utilize these funds for college-related expenses, they won't be subject to federal taxes and, in many cases, not to state taxes either. It's a savvy strategy for your child, grandchild, or yourself. Wait, yourself? Indeed, if the children don't exhaust all the funds, you or another family member can become the beneficiary to pursue higher education.
Crucially, this college fund remains separate from my retirement fund to ensure that Saving for our Children's College Education won't adversely affect my retirement plans. Now, our trip wasn't solely focused on educational concerns; we also wanted our other children and Stella to enjoy themselves without fixating on the daunting "College Decision" that supposedly determines their entire future. We carved out some memorable moments, such as our visit to Alcatraz Island and behind-the-scenes access to the Oscar Awards red carpet setup during the Walk of Fame tour. Here are some takeaways from this experience:
o Commencing early savings for your child's college fund is a decision I believe you'll cherish.
o Money can be a finite resource; let your child know it's available for their preferred college and potentially graduate school. This understanding can lead them to prioritize prestigious graduate programs over undergraduate institutions.
o Don't let college tours become stress-inducing; the "College Decision" isn't irrevocable at 18.
When you were 18, did you know what career path you wanted to pursue or where you wanted to attend college? I certainly didn't. However, these reflections became more relevant as my daughter, Stella, turned 17, and our family ventured to California to explore potential colleges.
For years, many of you have sought my financial guidance regarding Financial Advice for your kids’ college education. While I've always provided sound recommendations, I never truly empathized with the emotional aspect of this journey – until now. I've gained a newfound respect for the anxiety accompanying the "College Decision."
My wife, Jamie, and I recently took all our children to California to enable Stella to visit colleges and determine what aligns with her future college plans. After stepping onto the stunning Stanford College Campus, she candidly expressed, "You know, I don't think what they offer aligns with my interests." While I attribute this wisdom to my wife, I'm immensely proud that she recognized that, regardless of Stanford's prestige, there could be a fit elsewhere.
Visiting California can be a transformative experience for East Coasters, and we seized this opportunity. Exploring San Francisco, visiting Alcatraz Island, and witnessing the setup for the Oscars on the Hollywood Walk of Fame added an element of family fun to the serious business of college tours.
Ultimately, it remains crucial to begin saving for our children's education early – the intersection of time and money offers numerous college options. When each of my children was born, I researched College Savings Plans from different states to ensure that I wouldn't need to dip into my retirement savings to finance their education. It's important to note that residing in one state, doesn't necessitate investing in that state’s 529 plan. You have the freedom to choose from any 529 College Savings Plan, but states often offer incentives for residents to invest in their home state's plan. Researching all available alternatives is worthwhile, as it may allow you to save and pay for college without incurring taxes on your 529 College Savings Plan distributions.
Today, I'm content knowing that my children have choices. Money, like time, is finite. now have the option to utilize these resources at the school of their choice, or perhaps attend graduate school after completing their undergrad degree at a school that makes them happy but doesn’t cost an arm and a leg. They get to decide.
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