By Matthew Gaude & Shawn McGuire
It’s a major life event when your child heads off to college. That’s why college planning tasks like the ones we summarize in this article are so important.
If you’re a parent, guardian, or relative of a student about to enter their college years, we want to help you prepare your student for their journey. We believe that having a clear understanding of financial responsibilities is crucial for young adults to make the most of their opportunities.
This is an annual article we send out due to the importance of making sure your college child/grandchild has all the important documents in place. My (Matthew) oldest son, Gavin, will be graduating from Georgia Tech in December with a degree in computer science. He had an internship with Cox Automotive during the summer, and they offered him a full-time position after his graduation. We are very thankful for this opportunity for Gavin, but it was a result of his hard work as well over the last 3½ years.
My wife and I took our youngest son to move into University of North Georgia at the Dahlonega campus in August. We are now empty nesters, which is taking some getting used to, however, both boys occasionally come home on the weekends for some home-cooked meals and laundry.
We have some experience on this topic, so we wanted to provide the following information to help you cover all your bases.
Open a Checking Account in Their Name
Even though apps like Venmo and Zelle make it easier to send money to trusted friends and family members, most financial firms still want payment from a more conventional banking establishment. Think about starting an account in your student’s name at a bank affiliated with the school, or a convenient bank branch, or a credit union. If you open an account, it would be a good idea to include your name on the account, which is required for most states until the child becomes legal age.
Have a Conversation About Credit Cards
It is a good idea to go ahead and apply for a credit card for your child. We added each of our sons to our current credit card; each received a card in their name from the bank, however, we pay the balance off each month. We set a limit on how much they can spend, and if they go over, they are responsible for the balance. Having a credit card in their name helps them start to build credit for the future.
Explain Their Financial Aid Awards
If financial aid is part of your college planning picture, explain the award to your child by reading the award letter together. Otherwise, they’re at risk of not being able to utilize the funds. Certain financial aid programs, like the federal work-study program, have specific requirements. For example, if granted work-study, students need to find a job during the first few weeks of arriving on campus.
Create a Spending Plan
You’re in good shape if you already saved in a 529 plan to cover qualified educational costs like room and board, fees, and tuition. But don’t forget about incremental expenses like transportation to and from school, supplies for their dorm room, eating out, buying meals that aren’t included in their meal plan, entertainment, parking, and Uber/ride sharing.
You and your student need to decide on a reasonable spending plan that includes these incremental expenses. This can give them a better understanding of their financial decisions and a realistic picture of their spending before the first semester begins.
Remind Them to Contribute to Their Roth IRA
Make sure your student contributes to their Roth IRA if they have worked in the past or if they plan to work this year. They can start a Roth IRA on their own if they are older than 18, otherwise, it has to be a custodial Roth IRA.
For 2024, the annual contribution can be their earned income or up to $7,000 annually. As a parent, guardian, or relative, you can make a contribution on their behalf and help them get a head start on their long-term financial plans.
Review Your Insurance Policy
Check to see if your insurance policy covers your student’s dorm room or if dorm insurance could be a good idea. Dorm insurance can pay for the replacement of your child’s belongings in their dorm room in the event that they are stolen or damaged. Depending on the plan, dorm insurance is typically less expensive than renters insurance.
Don’t Forget About Healthcare!
This is the most important section of this article. Make sure your student has a copy of their health insurance card for medical purposes. Also, get your student’s HIPAA release form and healthcare proxy. College students are already or about to turn 18, which means legally you no longer have access to their health records and can’t make any medical decisions without these documents. In addition, you will also want to get a power of attorney completed and signed as well in case your child becomes incapacitated and/or cannot make decisions on their own. We can help you make sure you have the right documents for your student.
Work With a Professional
When you’re ready for professional guidance for college planning finances or wealth management, we’re here to help.
Our team at Live Oak Wealth Management prioritizes providing our clients and their families personalized wealth management and financial planning strategies. Our focus is to safeguard, maintain, and preserve the financial lifestyle of our clients throughout their lifetime.
To get in touch, call our office at 770-552-5968 or email [email protected]. Or, if you prefer, you can simply click here to schedule an appointment online.
About Matthew
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insight and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
About Shawn
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER® professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. Seek tax advice from a tax professional. Neither APFS nor its Representatives provide tax, legal or accounting advice.