Preparing for Postsecondary Education
It's funny the way life turns out. If you had asked me when I was younger if I would have worked in finance, I'd have laughed and said, “I can't imagine that.” I had no idea that financial planning could be so dynamic and fun, and it would be something that pushes me to grow every day while also being something I would look forward to doing every day.
I had a very nontraditional path to get here. As many of you know, I was a pastry chef before I became a financial planner. Most people seem to do the opposite route, but clearly I’m a rebel. I started pastry school while I was still in high school thinking that I could be a pastry chef to pay for my college education. You can hear the financial planner in there already, little did I know. I became a pastry chef and then got a degree in entrepreneurship so I could open my own bakery. But I realized after I had my degree that I wasn't ready to open my own bakery. I still wanted to explore the world.
So, I moved to San Francisco and continued working as a pastry chef, but I didn't really enjoy it. Still trying to find my way, I went back to school for women’s studies and quickly realized that also wasn't right. After that, I was at a loss for what to do.
During that time, my grandfather passed away and I started helping my grandma with her finances. It was kind of like an "aha" moment where I realized, "Oh, I love this, and I can really help women." So, I started to go in that direction. One thing led to another, and here I am today--having taken a very indirect route to get here. But I can tell you, I wouldn't change a single thing.
I started out at community college and still love community college to this day. The professors are people who actually work in the field they're teaching, so they can give you practical tips. Their experience is rich and incredibly valuable. Starting out at community college also gave me room to explore different interests without feeling like I had to pick a major right away. It is also the more economical option that then allowed me to transfer to a four-year university. I feel I got a good mix of really practical education while also getting a lot of theory, which is also important.
If your children don't choose the standard path, that's okay. There is a lot to life and a lot to explore, and sometimes the nontraditional route can lead them to the career of their dreams. I know it did for me.
As a financial planner, I'm often asked about ways to save for college, so I'd like to share some of my thoughts.
529 accounts allow you to invest money now that will grow, tax-free, for the future. The money can then be used to pay for qualified education expenses, again tax-free. You may also be able to put $10,000 per year toward high school tuition costs. There are limits to how much money can be contributed to a 529 account, and since the money must be used for qualified education expenses, there are also limits on what it can be used for in order to receive the tax benefits.
Brokerage accounts allow you to pay for college expenses that may not be covered by a 529 account. They also give you more flexibility with different educational expenses and housing costs. And should your child decide not to go to college, that money can still be used for whatever they decide to do.
Roth IRA accounts can also be used to cover education expenses. A child can contribute to a Roth IRA if they have any earned income, and that money can be used for education expenses as long as the Roth IRA has been open for more than five years.
There are also other educational accounts such as Coverdell, EE bonds, and UTMAs, which are less commonly used.
If you're looking to prepare for your children's educational expenses (or perhaps your own), I'd love to discuss the options with you!