John J. Bowman Jr Accountant, John J. Bowman Jr. Accountant, personal finance

Personal Finance for College Students

You’re finally living on your own, attending classes and joining new clubs and organizations. In college, it’s easy to overlook personal finance when focusing on your studies, but proper money management is vital for a successful future. If you’re new to college and money management, here is some personal finance advice.

Consider Your Credit

Swiping a card is convenient, but that money has to come from somewhere. If you’ve fallen victim to overspending on your card, try to set up a system to evaluate your spending habits. Perhaps you could limit card spending and use more cash. Or, perhaps you need to change your card limit to dissuade yourself from making unnecessary purchases. In addition, you should keep track of when your credit card payments are due—missing those payments can harm your credit score, which can be difficult to improve later down the line.

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Building Financial Independence After College

College years bring forth an abundance of growth and independence for students alike.  You’re likely getting into the habit of managing your school work and class schedule completely on your own, and if you’re taking advantage of on-campus housing you’re living on your own for the first time.  With all of these new life milestones coming to light, there’s a good chance that though you’re taking your own independent strides, you may still be under a parental wing, financially. As graduation is approaching for many college students this month, it may be time for you to consider the best ways to adapt to the real world, and potentially build your financial independence.  Here are a few tips:

Open Your Own Account/Credit Card

The first major step to building your own financial freedom after college is looking into opening your own bank account or credit card if you haven’t already.  Visit a bank that you trust, and sit down with a banker that will help set you up with the right type of account, preferably one that builds interest or provides you with small rewards.  As for a credit card, building your credit is an essential part of growing up; however, always be careful when using a credit card. To build your credit wisely, make small purchases that you can pay off in full each month.  Racking up a high balance that requires you to make minimum payments can ultimately do more harm than good in the long run. Additionally, you’ll want to research which credit card would work best for you. Many companies offer different programs and rewards and incentives; make sure you find what fits your financial situation best…

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Steps to Setting Up a 529 College Savings Plan

As a parent, your number one concern is always your children and how you can best provide for them.  While they may be young still, the future of their education is likely only a few years away, and as time goes on, college tuition costs are increasing drastically.  This may concern you, especially if you’re still paying off your own loans from your college days! Luckily, there’s hope, and a great way to get your little one’s future college finances in order.  The solution: a 529 college savings plan. Wondering the best way to set one up? Here are some simple tips:

Pick a Plan that Works Best for You

When it comes to 529 plans, it’s not as simple as just one.  There are two main types of 529 saving plans that you can choose from.  You can decide if a prepaid plan works best for you, or if an investment plan is a better choice.  If you decide on a prepaid plan, you can think of it as a locked-in plan. You generally pay for a year or a portion of the tuition ahead of time, locking in the price.  Depending on your state, the requirement can vary. Investment plans give you the ability to choose how you want to invest your funds, and how you can use the money depending on the institution that’s chosen down the road.

Open the Account

To open your 529 account, you’ll need to submit an application; this can generally be completed online; however, in some cases, you may need to mail it in.  Additionally, you’ll need to choose the right account to work with, whether it’s an Individual (Custodial), Trust, or Business account. From there, you’ll choose the custodian (likely yourself), and the beneficiary, (your child)…

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Saving for Your Child’s College Education

With the rapidly rising cost of college tuition, parents are well-justified in their anxiousness about how to pay for their child’s education. There is a myriad of options for parents wanting to get a head start in saving for this big investment. Although it can often be overwhelming deciding what path to take when planning for your child’s educational future and how to pay for it, here are a few of the top options to consider for your savings plan:

529 College Plan

The gold standard of college saving is the 529 plan. Also known as Qualified Tuition Programs (QTP), this plan allows parents to invest after-tax money into a qualified fund and then withdraw that money and its gains tax-free to put toward use for educational expenses. With more than 30 states offering these type of plans, it pays to shop around to find the best fit for your individual needs.

Roth IRA

Although this type of investment is most associated with retirement savings, a Roth IRA can also be an invaluable vehicle when saving for college expenses. The withdraw rules are similar to the 529, however, investors can use the Roth dividends to also go toward retirement, giving this type of plan more flexibility should your child not pursue a higher education.

Prepaid College Tuition Plans

Self-explanatory in nature, these plans allow parents the benefit of pre-paying for college at today’s prices. By locking in current prices, parents can guard themselves against rapidly escalating costs while also saving money.

Coverdell Education Savings Account

This trust applies to both college education expenses as well as costs incurred at K-12 levels. Although the terms are more flexible, a Coverdell account comes with a $2,000 annual limit, making this choice a deterrent for families wishing to contribute more.

UGMA and UTMA Custodial Accounts

Although these accounts do not have as many tax advantages as its Roth or 529 counterparts, they can be gifted to a child for any reason. Unlike other investment accounts geared toward education, these accounts are placed in the child’s name, giving them full control over the money when the term expires. Conversely, since the child owns the fund, the amount of qualifying aid might be affected.

 

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