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Saving for your Children

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Saving for your Children s Education and Missions August 16, 2012 Bryan Sudweeks, Ph.D., CFA From the BYU MSM web site Personal Finance: Another Perspective – PowerPoint PPT presentation

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Title: Saving for your Children


1
  • Saving for your Childrens
  • Education and Missions
  • August 16, 2012
  • Bryan Sudweeks, Ph.D., CFA
  • From the BYU MSM web site
  • Personal Finance Another Perspective
  • at http//personalfinance.byu.net

2
Abstract
  • The choice to help financially with your
    childrens education and missions is an
    individual or family decision. For those who
    wish to help, many are unsure of ways to help
    save to reduce the costs. This presentation will
    help with ideas on the why of personal finance,
    how education relates to financial goals,
    principles of saving for education and missions,
    and the process of selecting and the advantages
    and disadvantages of specific investment vehicles
    for education and missions. The emphasis is in
    what we can do now.

3
Objectives
  • A. Understand the why of personal finance
  • B. Understand how education relates to goals
  • C. Understand the principles of financing
    education and missions
  • D. Understand the process of selecting investment
    vehicles
  • E. Understand investment vehicles to save for
    childrens education
  • F. Understand investment vehicles to save for
    childrens missions
  • G. Understand how to apply for financial aid

4
A. Understand the Why of Personal Finance
  • We all have lists of what we could and should do
    in our priesthood responsibilities. The what is
    important in our work, and we need to attend to
    it. But it is in the why of priesthood service
    that we discover the fire, passion, and power.
    The what of priesthood service teaches us what
    to do. The why inspires our souls. The what
    informs, but the why transforms. . . My prayer is
    that as bearers of his priesthood we will ever
    stay attuned to the why of priesthood service
    and use the principles of the restored gospel
    to transform our lives and the lives of those
    whom we serve (italics, color and brackets added,
    Dieter Uchtdorf, The Why of Priesthood Service,
    Ensign, May 2012).

5
The Why (continued)
  • We all have lists of what we could and should do
    in our personal finance responsibilities. The
    what is important in our work, and we need to
    attend to it. But it is in the why of personal
    finance that we discover the fire, passion, and
    power. The what of personal finance teaches us
    what to do. The why inspires our souls. The what
    informs, but the why transforms. . . My prayer is
    that as bearers of his priesthood we will ever
    stay attuned to the why of personal finance and
    use the principles of personal finance and the
    restored gospel to transform our lives and the
    lives of those whom we serve (italics, color and
    brackets added, Dieter Uchtdorf, The Why of
    Priesthood Service, Ensign, May 2012).

6
The Why (continued)
  • What is the Why of personal finance that
    inspires our souls?
  • How important is it for each of us to understand
    these whys?

7
The Why (continued)
  • What is the why of personal finance?
  • We learn and apply personal finance in our lives
    to
  • 1. Learn the lessons that personal finance can
    teach us to help us become more like our Savior
    Jesus Christ
  • 2. Accomplish our personal and family goals
    which will require financial resources
  • 3. Accomplish our personal missions for which we
    were sent here on earth, and
  • 4. Help us return with our families back home to
    our Savior and Heavenly Fathers presence
  • The why is easier when we understand four key
    doctrines

8
Doctrine 1 Ownership
  • Ownership Everything we have is the Lords
  • The Psalmist wrote
  • The earth is the Lords, and the fullness
    thereof the world, and they that dwell therein
    (Psalms 241)
  • The Lord is the creator of the earth (Mosiah
    221), the creator of men and all things (DC
    9310), the supplier of our breath (2 Nephi
    926), the giver of our knowledge (Moses 732)
    the provider of our life (Mosiah 222), and the
    giver of all we have and are (Mosiah 221).
  • Nothing we have is our ownits all Gods

9
Doctrine 2 Stewardship
  • Stewardship We are stewards over all that the
    Lord has, is, or will share with us
  • The Lord stated
  • It is expedient that I, the Lord, should make
    every man accountable, as a steward over earthly
    blessings, which I have made and prepared for my
    creatures. (DC 10413)

10
Doctrine 3 Agency
  • Agency The gift of choice is mans most
    precious inheritance
  • President David O. McKay wrote
  • Next to the bestowal of life itself, the right to
    direct that life is Gods greatest gift to man.
    Freedom of choice is more to be treasured than
    any possession earth can give (Conference Report,
    Apr. 1950, p. 32 italics added).

11
Doctrine 4 Accountability
  • Accountability We are accountable for every
    choice we make
  • The Lord stated
  • For it is required of the Lord, at the hand of
    every steward, to render an account of his
    stewardship, both in time and in eternity (DC
    723).

12
What is Really Ours? (continued)
  • On this subject, Elder Neal A. Maxwell stated
  • The submission of ones will is really the only
    uniquely personal thing we have to place on Gods
    altar. The many other things we give, brothers
    and sisters, are actually the things He has
    already given or loaned to us. However, when you
    and I finally submit ourselves, by letting our
    individual wills be swallowed up in Gods will,
    then we are really giving something to Him! It is
    the only possession which is truly ours to give!
    (italics added, Swallowed Up in the Will of the
    Father, Ensign, Nov. 1995, 22.)

13
B. Understand How Education Relates to Other
Goals
  • Median
  • Level of Education  Annual Earnings
    Lifetime Earnings
  • Not a HS graduate 24,325 973,000
  • High school Diploma 32,600 1,304,000
  • Some College, no degree 38,675 1,547,000
  • Associate's Degree 43,175 1,727,000
  • Bachelors Degree 56,700 2,268,000
  • Masters Degree 66,775 2,671,000
  • Doctoral Degree 81,300 3,252,000
  • Professional Degree 91,200 3,648,000
  • Annual earnings is lifetime earnings divided by
    40 years.
  • Source Anthony P. Carnevale, Stephen J. Rose,
    and Ban Cheah, The College Payoff Education,
    Occupations, Lifetime Earnings, Georgetown
    University Center for Education and the
    Workforce, 2012.

14
How Education Relates (continued)
  • Is education a good investment?
  • President Gordon B. Hinckley said
  • Now is the season to train your minds and your
    hands for the work you wish to do. Education can
    prove to be the wisest and most profitable
    investment you will ever make (Tambuli, Sept.
    1989, 49).

15
How Education Relates (continued)
  • Cost Facts
  • Average U.S. medical school tuition cost in
    2010-2011 was 49,298 (public) and 66,984
    (private)
  • 2011 average top 20 MBA programs tuition and
    fees gt100,000 (varies by school), up 5.7 yoy
  • Average cost in tuition, fees and lost salary
    150,000
  • Annual budget for students of BYU in 2012-2013
  • Undergraduate 21,840 (LDS), 31,080 (non-LDS)
  • Graduate 25,074 (LDS), 31,024
    (non-LDS)
  • MSM/Law 30,826 (LDS), 41,776 (non-LDS)
  • Education isnt cheap, but the cost of ignorance
    is higher!

16
How Education Relates (continued)
  • You young people, the little decisions that you
    make can so affect your lives. Shall I go to
    school or not? Shall I continue on with my
    education? That is a big decision for some of
    you. Our doctrine suggests, although there may be
    some circumstances that would affect that
    decision, that the more education you receive the
    greater will be your opportunity to serve. That
    is why this Church encourages its young people to
    get the schooling that will qualify them to take
    their places in the society in which they will
    become a part. Make the right decisions. Take a
    long look (italics added, Pocatello, Idaho,
    Regional Conference, Idaho State University, 4
    June 1995).

17
How Education Relates (continued)
  • President Hinckley further commented
  • It is so important that you young men and you
    young women get all of the education that you
    can. Education is the key which will unlock the
    door of opportunity for you. It is worth
    sacrificing for. It is worth working at, and if
    you educate your mind and your hands, you will be
    able to make a great contribution to the society
    of which you are a part, and you will be able to
    reflect honorably on the Church of which you are
    a member. My dear young brothers and sisters,
    take advantage of every educational opportunity
    that you can possibly afford, and you fathers and
    mothers, encourage your sons and daughters to
    gain an education which will bless their lives
    (Inspirational Thoughts, Liahona, June 1999, 3).

18
C. Understand the Principles of Financing
Education and Missions
  • Principles of financing education and missions
  • 1. Teach your children to be financially
    responsible
  • 2. Help your children to contribute to their own
    and other family members missions and education
  • 3. If you choose to help, develop an education
    and mission plan that is consistent with your
    personal goals and budget, share it with your
    children early, and follow it
  • 4. Start early in saving for your childrens
    education and missions
  • 5. Invest funds wisely and tax-efficiently
    consistent with your tolerance for risk

19
Principles (continued)
  • 1. Teach your children to be financially
    responsible
  • Teach them to work and to earn, consistent with
    their age and abilities
  • Teach them to be accountable for their spending,
    just as they are for their words and thoughts
  • Teach them to share the things they havenone of
    our stuff belongs to us
  • Teach them that they earn and receive money based
    on their workingnot their whining

20
Principles (continued)
  • 2. Help your children to save for their own (and
    other family members) education and missions
    consistent with their abilities to earn
  • Encourage children to set savings goals where
    they can save for their own missions and
    education
  • Set up investment/savings accounts for your
    children, and contribute their savings to these
    accounts
  • Give your children opportunities to earn money
    that is earmarked, after paying the Lord,
    specifically for their missions and education
  • Consider matching childrens funds to encourage
    their contributions first before you will help

21
Principles (continued)
  • 3. If you choose to help, develop education and
    mission plans for your children consistent with
    your personal goals and budget and share it with
    your children
  • Develop education and mission plans. Determine
    how you will invest, help, what you will help pay
    for, and what children must do to receive funds
  • Set up investment accounts for your children and
    set aside funds each month to fund these accounts
  • Encourage your children to participate. Plans
    which require work and contributions by children
    have a better chance of teaching desired
    principles
  • Share these plans with your children early

22
Principles (continued)
  • 4. Start NOW (and early) to save for your
    childrens education and missions
  • Begin now and begin early if you choose to help
  • The best time to begin saving for your childrens
    education and missions is today. The Law of the
    Harvest takes time and is still in effect
  • Make saving a key part of your family budgetbe
    an example to your children
  • Have your children begin now to help save for
    their own missions as well

23
Principles (continued)
  • 5. Invest funds wisely and tax-efficiently
    consistent with your own tolerance for risk
  • Use wisdom in your investments
  • Do not take on more risk than you are comfortable
    with
  • Understand your available financial vehicles for
    education and missions
  • Use the investment vehicles which allow you to
    save the most on an after-tax basis (utilize tax
    benefits in your educational savings plan)

24
C. Understand the Process of Selecting Investment
Vehicles for Education and Missions
  • Is there process for selecting investment
    vehicles for financing education and missions?
  • Your priority should be
  • 1. Free Money
  • 2. Family Money
  • 3. Employment
  • 4. Loans
  • 5. Credit Cards (No!)
  • 6. Retirement Accounts (No!)

25
1. Free Money
  • Free money first--scholarships and grants
  • This is free money which is not paid back
  • If you have to pay money, its a scam!
  • Grants are need-based--complete the FAFSA
  • Pell Grant approximately 575-5,550/year
  • Scholarships from schools and private sources
  • You may need a supplemental application
  • Find out which ones you are eligible for on a
    scholarship search engine and apply for each
  • Armed Forces Scholarships See recruiting offices
  • Individual Development Accounts State sponsored,
    (Utah) www.uidan.org, or (877) 787-0727

26
2. Family Money
  • Use personal savings and help from parents
  • If children pay for their education and missions,
    they will likely use their resources more wisely,
    as it is their money they are spending
  • Start the process of financial self-reliance as
    soon as you can
  • Let your children do as much as they can, then
    help if you are able--but dont do it all
  • If parents and grandparents can help, that is
    wonderful
  • Express appreciation to anyone who helps!

27
3. Employment
  • Have children work when possible to offset
    educational expenses
  • Most colleges offer federal College Work Study
    and provide student employment opportunities
  • Undergraduate students enrolled in 12 semester
    hours should work no more than 20 work hours per
    week. This may cover rent and food expenses
  • High school students should work no more than
    0-10 hours per week while in school. Working more
    hours reduces GPA and likelihood of attending
    college
  • Working summers to save for mission and college
    is very desirable

28
4. Loans
  • Use (all) loans wisely. They must be paid back.
    Understand
  • a. Who pays the interest during school?
  • The borrower or the government?
  • b. When must you start paying back the loan?
  • Immediately or after graduation?
  • c. Who takes out the loan?
  • You or your parents?
  • d. What is the interest rate cap?
  • What is the highest rate you may pay?
  • e. What are the costs?
  • What are all the costs amounts, fees, etc.?

29
Loans (continued)
  • Subsidized Federal Loans
  • Subsidized Stafford Loan
  • a. Government pays interest while in school
  • b. Repayment begins 6 months after student drops
    below half-time enrollment or graduates
  • c. Loan is in the students name
  • d. For 2012-13, the interest rate is fixed at
    6.8. No interest accrues (or grows) while
    enrolled in school. Simple interest accrues at
    6.8 APR
  • e. Subsidized Stafford Loan amounts range from
    3,000 to 5,500 for undergraduates and 8,500
    for graduate students.

30
Loans (continued)
  • Unsubsidized Federal Loans
  • Direct Unsubsidized Stafford Loans
  • a. Student is responsible for interest during
    school
  • b. Repayment begins after student stays below
    half-time for a continuous 6 months
  • c. Loan is in students name
  • d. Fixed interest rate 6.8
  • e. Default and origination fees of 1.5. Loan
    amounts vary up to 12,500 for undergraduates and
    up to 20,500 for graduate students

31
Loans (continued)
  • Unsubsidized Federal Loans
  • PLUS Loan Available for parents of
    undergraduate, dependent students to help with
    school-related expense
  • a. Parent is responsible for interest accruing
    while the student is in school
  • b. Repayment begins 60 days after second
    disbursement
  • c. Parent is the borrower
  • d. Interest rates is 7.9 fixed APR charged from
    first disbursement
  • e. Parent can borrow up to cost of education less
    financial aid the student receives

32
Loans (continued)
  • Direct Unsubsidized Federal Loans
  • PARENT PLUS Loan Available for parents of
    undergraduate, dependent students to help with
    school-related expenses
  • a. Interest accrues while the student is in
    school
  • b. Repayment begins 60 days after second
    disbursement
  • c. Parent is the borrower
  • d. Interest rates is 7.9 fixed APR charged from
    first disbursement
  • e. Parent can borrow up to cost of education less
    financial aid the student receives

33
Loans (continued)
  • Unsubsidized Loans
  • Private Alternative Loans
  • a. Interest starts immediately and accrues
  • b. Must begin paying the loan back immediately
  • c. Student is the borrower
  • d. Interest rates are higher than Federal loans
    and there is no interest rate cap. A 14.5
    variable interest rate means loan amount can
    double in five years (Rule of 72)
  • e. These have higher up-front fees and may
    require a cosigner. Read the fine print VERY
    CAREFULLY
  • Caution -- these unsubsidized loans are much more
    expensive than federal unsubsidized loans

34
Loan Comparison
  • Federal Stafford Loan
  • Subsidized 6.8 fixed
  • Unsubsidized 6.8 fixed
  • Like a Credit Card
  • Principle
  • Federal Stafford, PLUS, Grad PLUS Less Costly
  • Private Alternative Loan
  • 14.5 variable
  • Double in 5 years
  • Unsubsidized only
  • Like a Credit Card
  • Principle
  • Private More Costly
  • APR limit 25 to Infinity

35
Loans (continued)
  • Final Thoughts on Loans and Borrowing
  • Use Federal loans first. Federal loans are
    generally less expensive than private,
    non-federal loans, subsidize the interest during
    school, and are a better choice if borrowing is
    necessary
  • Have the child borrow. Parents should not put
    their retirement at risk for their childrens
    education
  • Let the child work a semester. This may not only
    help the child save money, but teach the
    importance of spending wisely
  • Avoid private-alternative loans. Beware of
    aggressive marketing campaigns by these
    companies. These loans are very expensive

36
5. Credit Cards (No!)
  • Credit Cards and Payday Loans
  • Among the most expensive way to borrow
  • They require you to pay it back immediately
  • There is no help in the payment of interest
  • The interest rates are extremely high (gt 500)
    and you are in school
  • These are not advisable ways to finance schooling
    and are usually the result of poor planning!!!

37
6. Retirement Accounts (No)
  • Taking money from retirement accounts is NOT NOT
    NOT NOT NOT recommended
  • (Do you get the hint?)
  • Parents first priority is to save for their own
    retirement, and then, if resources are available
    and they desire, to help their children with
    their education (there is no commandment to do
    this)
  • It is not wise to jeopardize your retirement for
    your childrens education. They can get grants
    and loans and will live longer
  • Find other alternatives. This is expensive, not
    tax efficient, and is not a good option to even
    think about!

38
D. Understand Investment Vehicles to Save for
your Childrens Education
  • College Savings Plans
  • Six major ways to save for college
  • With Tax benefits
  • 1. Series EE and Series I Government bonds
  • 2. Education Savings Account (Education IRA)
  • 3. 529 Prepaid Tuition Plan
  • 4. 529 Savings Plan
  • Without tax-benefits
  • 5. Tax-efficient Investing
  • 6. Custodial Accounts (UGMA/UTMA)

39
1. Series EE and Series I Bonds
  • Advantages
  • Bond earnings are tax-free if used for paying
    tuition and fees (I bond rates are 2.2 and EE
    bonds are 0.6 until October 2012)
  • Earnings are not taxed until bonds are cashed
  • Can be purchased in small denominations
  • Disadvantages
  • 3-month penalty on early withdrawal before 5
    years, with minimum holding period of 1 year
  • 10,000 per year maximum purchase per year per
    SSN (and 5,000 more if use your tax refund)
  • Can only be used for tuition and fees, not other
    expenses for tax-free status

40
U.S. Series EE Bonds/I over Time
41
EE/I Savings Bond Phase-out Limits
  • If your income is above specified limits in the
    year bonds are cashed, you cannot exclude the
    interest income from your income taxes. The
    limits are
    Married
  • Year Filing Single Filing
    Jointly
  • 2009 69,950-84,950 104,900-134,900
  • 2010 69,950-84,950 104,900-134,900
  • 2011 71,100-86,100 106,500-136,500
  • 2012 72,850-87,850 109,250-139,250
  • Your modified Adjusted Gross Income is your
    adjusted gross income adding back certain items
    such as foreign income, foreign-housing
    deductions, student-loan deductions,
    IRA-contribution deductions and deductions for
    higher-education costs.

42
2. Coverdell Education Savings Account (ESA)
  • Advantages
  • You choose your investments
  • Distributions are tax-free (even beyond 2012)
  • Can be used for eligible elementary, secondary
    and post-secondary education expenses
  • Disadvantages
  • Contribution limits of 2,000 per year in 2012,
    which may phase out as your income increases
    beyond specific limits
  • Funds must be used by age 30 (but can be
    transferred to other children). Earnings not
    used for educational expenses are taxed with a
    10 penalty
  • Assets reduce financial aid dollar for dollar

43
Coverdell Deductibility Limits
  • Education IRA MAGI Phase Out Range (in
    000s)
  • Year Amount Single
    Range Married FJ Range
  • 2008 2,000 95-110 190-220
  • 2009 2,000 95-110 190-220
  • 2010 2,000 95-110 190-220
  • 2011 2,000 95-110 190-220
  • 2012 2,000 95-110 190-220
  • Your Modified Adjusted Gross Income is your
    adjusted gross income and adding back
    certain items such as foreign income,
    foreign-housing deductions, student-loan
    deductions, IRA-contribution deductions
    and deductions for higher-education costs.
    Earnings beyond these limits (95k single and
    190k jointly) result in a phase out of allowable
    interest deductions, which totally phase out at
    110k and 220k).

44
3. 529 Prepaid Tuition Plan
  • Advantages
  • You know tuition will be covered, regardless of
    raises in costs of tuition
  • May be useful if you think your children will not
    be eligible for financial aid. Can save up to a
    maximum of 390,000 per child in 2012
  • Disadvantages
  • May not be offered in the state you/your child
    wants
  • Does not allow you to choose your investments
  • Your children are young, so you could be more
    aggressive with your investing for higher returns
  • Assets reduce financial aid dollar for dollar

45
4. 529 Savings Plan
  • Advantages
  • Control of the funds resides with the
    contributor, who chooses the assets within
    options provided
  • 529 Savings Plan assets are not considered
    student assets, increasing aid
  • States may offer tax deductions for contributions
    to your local 529 funds (check by state)
  • Distributions are tax-free if used for qualified
    educational expenses (390,000 maximum in 2012)
  • Disadvantages
  • May not cover all college expenses
  • If not used for educational expenses, earnings
    subject to tax and 10 penalty

46
Different States Savings Plans
  • When determining which 529 Plan to use, start
    with a review of your states 529 plan (Utahs
    Plan is at www.uesp.org)
  • Check the fees (at the Plan and Fund level)
  • Check for any tax benefits (Utah has a 5 tax
    credit against your Utah State tax)
  • Check for investment assets and options
  • Check for the maximum amount you can invest per
    child
  • Once you have reviewed your states plan, read
    about other states plans and select the best
    plan to meet your needs and goals. You can
    invest in any states plan

47
College Savings Plans Comparison Chart Coverdell
and 529 information From Robert Brokamp, the
Motley Fool.com, May 1, 2002
48
College Savings Comparison (continued)
49
College Savings Comparison (continued)
50
5. Tax-efficient Investing
  • How do you invest tax-efficiently
  • 1. Know your tax rates. Calculate the after-tax
    return on each of your investments
  • 2. Invest long-term. Replace interest and
    short-term distributions with long-term capital
    gains and LTCG distributions
  • 3. Invest wisely. Replace interest and
    short-term distributions with qualified stock
    dividends/stock distributions (consistent with
    your risk tolerance)
  • 4. Receive tax-exempt income. Purchase
    muni/Treasury securities when rates are more
    attractive than other securities for tax-exempt
    income

51
Tax-efficient Investing (continued)
  • Advantages
  • Can be invested in all types of financial assets,
    stocks, bonds, mutual funds, etc.
  • Can be used for any educational, mission, or
    other expense
  • Parent has control of the assets and can use them
    for any purposes
  • Investments can be made which minimize taxes
  • Disadvantages
  • No tax advantages

52
6. Custodial Accounts UGMA/UTMA
  • Advantages
  • Can be invested in all types of financial assets,
    stocks, bonds, mutual funds, etc. UTMA has fewer
    restrictions and may include real estate
  • Can be used for any educational or other
    expenses, including missions
  • Disadvantages
  • No tax advantages. Currently taxed at parents
    rate until child is 18 years old
  • Is considered the childs money as soon as the
    child is of ageit cannot be taken back by the
    parent
  • I prefer a tax-efficiently invested account

53
My Preferred Education Vehicles
  • For a majority of families I recommend
  • First, the 529 Savings Plan
  • This is a good option with many benefits
  • If you are from Utah, you get a 5 tax credit of
    up to a 3,480 contribution if married (1,760
    per beneficiary in 2012)
  • Utahs plan is very inexpensive and utilizes
    Vanguard Funds
  • Money can be used in any college in any state
  • Second, the Education IRA
  • Third, I Bonds due to the higher interest rate if
    you can accept a variable rate (but for
    tuition/fees only)

54
E. Understand the investment vehicles you can
use to save for your childrens missions
  • There are fewer ways to save for childrens
    missions
  • 1. Tax-efficiently invested assets (with
    accounts in each childs names to remind you of
    their purpose)
  • 2. Custodial accounts UGMA/UTMA (Not
    Recommended)

55
1. Tax-efficient Investing
  • Four ways to invest tax-efficiently
  • 1. Know your tax rates. Calculate the after-tax
    return on each of your investments
  • 2. Invest long-term. Replace interest/short-term
    distributions with long-term capital gains/LTCG
    distributions
  • 3. Receive stock dividends. Replace
    interest/short-term distributions with qualified
    stock dividends/stock distributions (consistent
    with your risk tolerance)
  • 4. Receive tax-exempt income. Purchase
    muni/Treasury securities when rates are more
    attractive than other securities

56
Tax-efficient Investing (continued)
  • Advantages
  • Can be invested in all types of financial assets,
    stocks, bonds, mutual funds, etc.
  • Can be used for any educational, mission, or
    other expense
  • Parent has control of the assets and can use them
    for any purposes
  • Investments can be made which minimize taxes
  • Disadvantages
  • No tax advantages

57
2. Custodial Accounts UGMA/UTMA
  • Advantages
  • Can be invested in all types of financial assets,
    stocks, bonds, mutual funds, etc. UTMA has fewer
    restrictions and may include real estate
  • Can be used for any educational, mission, or
    other expense
  • Disadvantages
  • No tax advantages. Currently taxed at parents
    rate until child is 18 years old
  • Is considered the childs money as soon as the
    child is of age (age 21 in Utah)it cannot be
    taken back by the parent
  • I prefer a tax-efficiently invested account

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F. How Do You Reduce the Cost of Your Kids
Education and Sign up for Aid?
  • 1. Encourage parents to begin planning early
  • 2. Fill out the FAFSA (Free Application For
    Federal Student Aid) on the net at
    www.FAFSA.ed.gov (remember your PIN number)
  • Follow the instructions and do it early (usually
    after your tax forms are completed)
  • You may submit the FAFSA as early as January 1
    for the Fall term
  • The amount of your award is based on the FAFSA
    results and credit hours, not when you apply

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Signing Up for Aid (continued)
  • 3. Talk with your personal financial aid
    counselor in the Admissions, Financial Aid,
    Scholarship Counseling Center (D-148 ASB) at BYU.
  • Call their direct line for an appointment at
    801-422-7075
  • They will guide you in the process and help you
    in determining your eligibility for aid
  • You can also go to feedback.byu.edu to submit
    concerns or questions (24/7), which will be
    routed to your counselor for a response
  • 4. Look for other available aid on the web.
  • View the following sources and utilize them

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Helpful Websites Containing Information about
Financing School
  • Helpful Websites
  • Onestop.byu.edu FinancialAid.byu.edu
  • Scholarships.byu.edu Opsf.byu.edu
  • BYU resources
  • BYU Counseling Center Admissions, Financial Aid,
    Scholarships (801-422-4104 or 801-422-7025)
  • To have your federal aid in place by fall
    semester, it is wise to submit the FAFSA by June
    1 the same year, unless you are planning to get
    married soon
  • Make an appointment with a counselor if you have
    questions

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Resources for Financing School (continued)
  • www.fafsa.ed.gov - Free Application for Federal
    Student Aid. This form must be filled out for
    any federal financial aid
  • www.pin.ed.gov request a Personal
    Identification Number (PIN) needed for FAFSA
  • nslds.ed.gov provides student a centralized,
    integrated view of their Title IV loans and
    grants
  • www.fastweb.monster.com matches student
    profiles to a database of scholarships
  • www.collegeboard.com connects student profiles
    to a database of scholarships, internships, and
    loans.
  • www.srnexpress.com contains resources on
    scholarships, fellowships, internships, and loan
    forgiveness programs

62
Resources for Financing School (continued)
  • www.wiredscholar.com a good website for college
    preparation and information.
  • www.finAid.org a comprehensive site that has
    information on loans, scholarships and savings
    plans.

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Summary
  • A. The why of personal finance?
  • learn and apply personal finance in our lives to
  • 1. Learn the lessons that personal finance can
    teach us to help us become more like our Savior
    Jesus Christ
  • 2. Accomplish our personal and family goals
    which will require financial resources
  • 3. Accomplish our personal missions for which we
    were sent here on earth, and
  • 4. Help us return with our families back home to
    our Savior and Heavenly Fathers presence

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Summary (continued)
  • B. How education relates to your financial
    goals?
  • Education can prove to be the wisest and more
    profitable investment you will ever make
  • The more education you have, the greater will be
    your opportunity to serve

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Summary (continued)
  • C. The principles of financing education and
    missions
  • 1. Teach your children to be financially
    responsible
  • 2. Help your children to contribute to their own
    and other family members missions and education
  • 3. Develop an education and mission plan that is
    consistent with your personal goals and budget
    and then follow it
  • 4. Start early in saving for your childrens
    education and missions
  • 5. Invest wisely and tax-efficiently

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Summary (continued)
  • D. The process for selecting investment vehicles
    for financing school and missions
  • The priority is
  • 1. Free Money
  • 2. Family Money
  • 3. Employment
  • 4. Loans
  • 5. Credit Cards (No!)
  • 6. Retirement Accounts (No!)

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Summary (continued)
  • E. Investment vehicles to help save for your
    childrens education
  • 1. Series EE and Series I Government bonds
  • 2. Education Savings Account (Education IRA)
  • 3. 529 Prepaid Tuition Plan
  • 4. 529 Savings Plan

68
Summary (continued)
  • F. Investment vehicles to help save for your
    childrens missions
  • 1. Tax-Efficient Investing
  • 2. Custodial Accounts (UGMA/UTMA)

69
Summary (continued)
  • G. Support for how to reduce the cost of
    education and sign up for aid
  • See the PowerPoint on the website
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