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Summer 2024

Financial Wellness Minute

Kickstart your child’s educational journey

A mother with two young children.
Consider this: Affording an education at any level can be expensive. Luckily, there are ways to plan for a loved one’s educational expenses, from elementary school books and uniforms all the way to college and graduate school tuition.

For many parents, providing their children with a higher-level education is a top priority—whether that’s college, graduate school or technical/vocational school. Between 2000 and 2021, the percentage of Hispanic/Latino Americans aged 25 to 29 with at least a bachelor’s degree more than doubled—showing that higher education is an important marker of community achievement as well as career success.3 With the cost of education rising, planning for these expenses now could help your scholar reach their educational heights later.

Why is this important?

Achieving alternative forms of education may be a requirement in many job markets and industries. Also, whether you’re of immigrant-origin or a third-generation American, your family’s success can feel like an achievement for your larger community. When you plan for your child’s future today, you may impact your family and community’s achievements tomorrow.

How to get started

Open a 529: This is not just an account for parents. It’s also available to grandparents, relatives and anyone who wishes to support the future student. A 529 plan may provide tax-free growth, tax-free withdrawals and sometimes even tax-deductible contributions. This type of account offers the ability to save as much as possible for costly educational expenses, such as tuition and textbooks.

Look at all the educational options: Not everyone will want to go to college. For those who do, discuss the cost of in-state vs. out-of-state tuition, two-year vs. four-year programs and professional paths that require graduate-level education. For individuals not interested in college, encourage them to research paths that do interest them, such as vocational school or alternative career trajectories.

Read up on loan options: Even with advanced planning, it may be necessary to take out loans to pay for some educational expenses. Weighing the options—like personal loans, home equity lines of credit or loans against your investments—could save you money in the long run.

Talk to your children about money: Start talking about the power of saving at an early age. It’s natural for children to want to spend pocket money, but incentivizing saving for larger purchases can teach a valuable lesson in working toward a greater goal or value. Encourage them to open a savings account and practice putting in a few dollars each month—showing them their growth over time. For the teens in your life, show them how to create a monthly budget based on how much they earn and spend. Talk about saving towards bigger purchases, such as a car.

Dig deeper! Read through Smart—and surprising—ways to pay for your children’s education.

Quick insights

  • NOTABLE NUMBER

    $890

    The average American household budgeted $890 on K-12 back-to-school expenses in 2023. Purchasing essentials first then comparison shopping for off-brand or discount items can help you save money.1

  • JARGON DECODER

    Grant

    A type of student financial aid that typically does not need to be repaid and also tends to be based on financial need. Start your search for eligible grants from the federal government, schools, businesses and organizations. Then, pursue loans that require being paid back with interest.2

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ASK MERRILL®
  • Question:

    “We always look forward to having an annual family destination vacation in August. But this year, we had some unexpected college expenses come up. How can we plan for our family’s needs and still afford an annual vacation?”

  • Answer:

    “There are ways you can enjoy time off with your family, plan for your long-term goals and prepare for unexpected expenses. First, establish an emergency fund that will cover six to nine months of essential expenses. Next, prioritize your long-term goals by making a plan for retirement and education expenses. Then, you can begin saving for your family’s short-term goals, such as vacations. Even on a limited budget, you can enjoy a staycation, road trip or a volunteer vacation.”4

Reserve a spot to ask a Merrill Financial Specialist questions of your own.

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