The last year and a half has seen a lot of financial turbulence thanks to the COVID-19 pandemic, but it’s still important to stay focused on planning for things like retirement and your children’s education. Even in tough economic times, no amount is too small to put toward educational expenses.
Here are a few tips to either get started on financial planning for your kids’ education in Phoenix, AZ or to renew that commitment after a tough year.
Get in the habit
The toughest part of saving is getting started, and to get started you need to build up a habit of tracking your money and saving over time. You need to get a sense of where you stand financially to be able to set long-term goals and develop strategies that will help you get where you want and need to be.
It can be stressful to keep such a constant focus on your finances, but the more you know and understand, the better you can save for your children’s future.
Know your priorities
While it’s important to save for your children’s education, there are other financial issues that are likely even more important. For example, you should always place retirement over education. Max out your retirement plan contributions before you start to save for college.
That being said, you might be able to set aside small amounts for college. Even $25 a month helps. The sooner you start saving, even in small amounts, the less you’ll have to set aside later, and you can always increase your savings later on as you become more capable of stocking away money.
Private school or public school?
It may be that private school is the best option for your child educationally. However, it’s important to note that private school will always cost significantly more than public school, and thus it will also reduce your savings capacity for educational costs later on for college tuition. You may also have to sacrifice other activities you would pay for to be able to cover expenses for private school, and you may find that simply is not worth it to you.
Childcare and its expenses
In addition to the costs of potential private schooling, you will also need to manage your childcare costs to make sure you’re able to save for future educational expenses. Daycare and in-home care can be extremely expensive, especially if you have multiple children. If you’re able to have extended family help out, or juggle your work schedules, then you may be able to cut down on how much you have to pay for childcare, but of course, not everyone has the flexibility or possibility of making this work.
In some cases, it may actually be more financially sensible for one person not to work in the early phases of a child’s life so you can save more money rather than sending it all to daycare.
For more information about financial planning and education, contact the Phoenix, AZ team at Fiduciary Advisors, Ltd. today.