The Ultimate Guide to Education Planning: Securing Your Child's Future

Alecia Decker |

As we wrap up Summer activities and look toward Fall, it’s hard to overlook that it’s back-to-school time for kids of all ages. Whether you have little ones heading off to Kindergarten or bigger ones bound for high school, it can be bittersweet to see Summer come to an end. However, heading back to school is a great time to talk with your family and your financial advisor here at Creason-Edwards & Cimarolli about education planning. Whether it’s an initial conversation or a review of the plan you have in place, let this season be a reminder to check in with us.

Education planning is a critical component of securing a bright future for your child. With the ever-increasing cost of education and the competitive nature of academic and professional landscapes, it's essential to start planning early. Let us walk you through the key steps to help ensure your child has access to quality education and the resources they need to succeed.

Start Early. The earlier you start planning for your child's education, the better. Early planning allows you to take advantage of long-term savings options and compound interest, reducing the financial burden later. Even small, regular contributions can grow significantly over time.

Set Clear Goals. Define what you want to achieve with your education plan. Consider what level of education you want to fund (primary, secondary, college, postgraduate), what route you want your child to pursue (private or public school), whether or not your child will attend a local/state school and/or study abroad, and what your child’s interests and potential career path are. The answers to these questions will help determine

Assess Costs

Research the current costs of education at different levels and institutions. Keep in mind that education costs tend to rise over time, so factor in inflation. Don't forget to include additional expenses such as textbooks, uniforms, extracurricular activities, and living expenses if your child plans to study away from home.

Explore Savings Options

Several savings options can help you build a robust education fund:

  • 529 College Savings Plans: These state-sponsored plans offer tax advantages and can be used for qualified education expenses. Each state has its own plan with different benefits.
  • Education Savings Accounts (ESAs): Also known as Coverdell ESAs, these accounts allow for tax-free growth and withdrawals for education expenses, with annual contribution limits.
  • Custodial Accounts: UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) accounts are brokerage accounts that parents can set up for their children. The funds can be used for any purpose, including education.
  • Regular Savings Accounts: While they don't offer tax advantages, regular savings accounts are flexible and easy to access.

Invest Wisely

Consider a mix of investments to grow your education fund. Diversify your portfolio to balance risk and return. Stocks, bonds, mutual funds, and ETFs are common options. Consult with a financial advisor to create an investment strategy that aligns with your goals and risk tolerance.

Apply for Scholarships and Grants

Encourage your child to apply for scholarships and grants. Many organizations offer financial aid based on academic performance, extracurricular activities, and financial need. Research available options and stay on top of application deadlines.

Encourage Academic Excellence

A strong academic record can open doors to scholarships and prestigious institutions. Encourage your child to excel in their studies and participate in extracurricular activities. Support their interests and provide resources for learning and growth.

Plan for Student Loans

While it's best to minimize debt, student loans can be a useful tool to bridge any gaps in funding. Understand the different types of loans available, including federal and private loans, and their respective terms and conditions. Aim to borrow only what is necessary and consider future earning potential when planning for loan repayment.

Stay Flexible

Life is unpredictable, and your education plan should be adaptable. Regularly review and adjust your plan as needed. Monitor your investments, reassess costs, and be prepared to make changes based on your child's evolving interests and goals.

Seek Professional Advice

Financial planning for education can be complex. Consider working with a financial advisor who specializes in education planning. They can provide personalized advice and help you navigate the various savings and investment options.

Education planning is a vital step in ensuring your child's success. By starting early, setting clear goals, and exploring various savings and investment options, you can build a solid foundation for your child's educational journey. Stay proactive, flexible, and informed to make the most of the resources available and give your child the best possible start in life.