Quick Tips | Week of January 30 | Education Funding, Insurance, Story Time
Welcome to this weeks quick tips. Use these ideas to improve your financial situation. Reach out to me to dig deeper into these topics.
Education Funding and Student Loans
Are you starting to think about funding for your kids education? Use the link below to determine your Expected Family Contribution or EFC. This is a measure used by colleges and universities in the United States to determine a student's financial need. It is calculated using information provided on the Free Application for Federal Student Aid (FAFSA) and takes into account factors such as the student's and their family's income and assets. The EFC is used to determine the student's eligibility for financial aid, including grants, scholarships, and student loans. It is not the amount of money that a family is expected to pay for college, but rather a number used to calculate the student's financial need.
https://finaid.org/calculators/quickefc/
Expected Family Contribution (EFC)
As you save for your children’s education, you may want to think about the implications of education savings with your financial aid needs. When determining the EFC for financial aid be aware that assets owned by the student will have a higher impact on your eligibility. The student owned assets will increase EFC by 20% while parent owned assets only increase it by 5.64%. Make sure you, as the parent, owns their 529 as opposed to the student. If the college savings account is owned by the student, transfer it to the parent before applying for financial aid.
Financial planning tree
Sometimes the best way to explain a concept is through a story. I like to think of a financial plan as a tree. The tree represents your goals and objectives within your plan. That tree needs sunlight to grow. The sunlight represents your income. I’ll introduce clouds into this picture that represent your expenses. A good plan will help you clear out some clouds and increase the amount of light getting to the tree so it can flourish. The sunlight reaches the top leaves and branches first and then trickles down to everything else below. This represents the priorities of your goals in which you plan observes. So the next time you are reviewing your plan, think about how it is arranged. Is your tree getting enough sunlight? Or is there too many clouds blocking it? Are the leaves at the top of your tree the ones you want there? Or should they be moved down so other goals can grow faster? One of the most important parts of a tree is its trunk or in financial planning’s case, the foundation. The foundation need to be strongly rooted by have a repeatable and organized process. Without this, you won’t see your objectives clearly and not know whether you’re making progress or not.
Death and Disability Insurance
Statistically, if you are in your early 30s, you are 4 times more likely to become disabled than dying.
Death and disability are two different risks that individuals can face and plan for in their financial planning.
Death: refers to the permanent loss of life and can have a significant impact on an individual's financial security and the financial security of their loved ones.
Disability: refers to the inability to perform one's occupation due to injury or illness. Disability insurance can provide income replacement for those unable to work and can help maintain financial stability during a time of need.
Both death and disability can have a significant financial impact, and individuals should consider these risks when creating a comprehensive financial plan. This can include purchasing life and disability insurance, creating an emergency fund, and planning for unexpected events.
Disability Insurance
There are two main types of disability insurance: short-term disability insurance and long-term disability insurance. Short-term disability insurance provides income replacement for a set period, typically a few months, while long-term disability insurance provides income replacement for a longer period of time, often several years or until the individual reaches retirement age.
Disability insurance can be purchased through an employer-sponsored plan or as an individual policy. The cost and terms of the policy will depend on various factors such as the individual's age, occupation, and income. Individuals should carefully consider their need for disability insurance and their ability to pay for it when making a decision on purchasing a policy.
Fiduciary Mission
At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.
We believe in transparent, client-focused service that puts your financial goals at the center of everything we do. As a fiduciary firm, we are dedicated to acting in your best interests, and we never sell products that charge commissions to clients.
Our goal is to help you achieve a stable and prosperous financial future by providing comprehensive financial planning services that are tailored to your individual needs. Whether you're just starting out in your career or you're already well-established, we can help you navigate the complexities of financial planning and create a roadmap for success.