SAVANNAH, Ga. (WTOC) - Paying for a college education takes a lot of planning. Brian Byers spoke to a local financial advisor about how to approach saving for school, and what mistakes to avoid.
A college education adds up to such a large expense, financial advisor Kyle Powers advises that the sooner you save, the better.
“We need the power of compounding on our side, and that really just takes time,” Kyle Powers, Financial Advisor with the Fiduciary Group, said.
But you don't have to save all of that money on your own. Powers says Coverdell Accounts and 529 accounts are both options to consider. In Georgia, a 529 path to college account is even tax deductible.
"Many custodians have their own programs. For example, Fidelity has a cash back rewards card, and that 2% cash back could be redirected to a 529 account that's held at fidelity. A good additional way to set aside some funds."
When it comes to figuring out just how much to save, try online resources and calculators. He suggests FinAid.com. And don’t be afraid to include your children in the process.
"As you're discussing the academic part of it, and what it's going to take to get into that school, start talking about what school costs. That's a very real part about what we're working towards. If you've got accounts that you're saving in, you could show them the quarterly statements as they arrive."
He also shared the most common mistakes parents make in saving for college. Waiting to save tops that list.
“This is a big goal, and it’s going to take time to achieve it. Another one is not taking advantage of those state-level 529 plans. Next is not understanding the implications for the types of account registrations. So it’s very favorable to have the assets in the name of the parent, and making sure you’ve set up the right type of account from the start is important.”
If you're uncertain of how to save given the pandemic's impact on the economy, he says it all goes back to the fundamentals of budgeting.
“We’ve all had to take a look at our budgets and first, and foremost is an emergency savings. Without that, our longterm goals are going to be constantly derailed by short term priorities. If you have that emergency savings and your employment is stable, keep contributing to the accounts. A down market is not the time to stop contributing. That’s the most important time to contribute.”
As your child gets closer to college, do a deep search for scholarships beyond just what’s offered through the university they’re attending. Powers says a lot of those funds go unused.