Ep 33: Saving for College: An Executive Function Approach to Mastering Your Money

For many people (especially those with Executive Function challenges), managing money can be really stressful. If you can relate to this challenge and are thinking of sending a kid off to college, then learning how to plan your finances accordingly is something that’s worth being really proactive about. According to the Education Data Initiative, average tuition and fee rates have increased 130% since 1990 - and that’s after adjusting for inflation (yikes!) So, what can we do? Is there a way to approach saving for college that is less stressful and more effective than just wingin’ it or waiting till the last minute?

Luckily, today’s guest is Shannon Vasconcelos, the Director of College Finance for Bright Horizons College Coach, and she joined me to discuss saving for college in a very executive function-friendly manner. In other words, she was the perfect expert I needed for this topic. Listen to learn from this college finance expert how you can approach this new exciting yet expensive chapter well prepared!

Show notes:

Bright Horizon’s College Coach

www.getintocollege.com

Getting In: A College Coach Conversation

https://getintocollege.com/Resources/Getting-In-Podcast

You Need a Budget (Hannah’s favorite budgeting tool)

www.ynab.com

Saving For College

https://www.savingforcollege.com/

Roth IRA and 529 Explained

https://www.savingforcollege.com/article/which-is-best-529-college-savings-plan-or-roth-ira

Making College Affordable: 5 Tips for Securing Scholarships

https://www.beyondbooksmart.com/executive-functioning-strategies-blog/making-college-affordable-5-tips-for-securing-scholarships

Contact Us!

Reach out to us at podcast@beyondbooksmart.com

IG/FB/TikTok @beyondbooksmartcoaching

Transcript

Hannah Choi 00:04

Hi everyone and welcome to Focus Forward, an executive function podcast where we explore the challenges and celebrate the wins you'll experience as you change your life through working on improving your executive function skills. I'm your host, Hannah Choi. So this episode is about saving money for college or whatever post high school plans you or your child might have. And for many people, especially those with EF challenges, managing money can be really stressful. And because college is very expensive, it's something that is good to be really proactive about. Starting to save early is what we would do in a perfect world. Actually, in a perfect world college just wouldn't be so expensive, and we'd all have the means to pay for it without worrying about how we're going to do that. Unfortunately, this is not our reality. Today's guest, Shannon Vasconcelos, who is the Director of College finance for Bright Horizons College Coach told me that going to college is a lot more expensive than it was 30 years ago, I did a little research and according to the Education Data Initiative, since 1990, average tuition and fee rates have increased 130% And that is after adjusting for inflation. That's crazy. So what can we do? Is there a way to approach saving for college that is less stressful and more effective than just winging it or waiting until the last minute. Luckily, Shannon approaches saving for college in a very executive function friendly manner. So, she was just the expert I needed for this topic. We focused on college savings as college does end up being the most expensive option that people choose to do after high school. But even if you or your child have other plans, many of the lessons and tips about saving that she shares are still applicable. I met Shannon through my experience being a guest on Bright Horizons podcast called "Getting In: A College Coach Conversation". Their expert hosts and guests have created an absolute wealth of information about pretty much every aspect of the college admissions process. Although every week they come out with a new episode. So apparently, there's more to learn. I was so thrilled to have Shannon share her knowledge on Focus Forward. So listen to learn more from this college finance expert. Now on to the show. All right. Well, thanks so much for joining me, this is gonna be fun. Talking about money is a little stressful for me, I find I find finances stressful. So I'm actually really looking forward to this. I've got kids that are in sixth and ninth grade. So we are definitely the audience for this episode. Good. Would you introduce yourself for our listeners?

Shannon Vasconcelos 03:02

My name is Shannon Vasconcelos. And I am Director of College Finance for Bright Horizons College Coach. We are a company that helps families prepare for college and all different ways from saving to college through the college application process. And how to get through the those college payments.

Hannah Choi 03:24

Yeah, that's great. And I got to be on your podcast. A few months back, I was talking about college and how to find success in college if you're going to college with some executive function challenges. So that was really fun. I really enjoyed that.

Shannon Vasconcelos 03:39

Yeah, we really loved having you.

Hannah Choi 03:43

I'm so happy you're here today. So one thing that, that we talked about before we met and that I and then I really wanted to bring up again is that though we will be talking a lot today about saving for college. Some kids don't go to college and and that's great for those kids, if that's not their path. And but as parents, we can still, you know, think about their future and maybe there is something else we can be saving for for them. And so I hope that any listeners whose children choose not to go to college can still benefit from some of the some of the content that we talked about today. So I just want to acknowledge that different paths that they follow. And for sure, and

Shannon Vasconcelos 04:31

I would say college tends to be the most expensive path week. And so I think if you're not sure if college is in your child's future, I always feel like it's better to over prepare than under prepare. If it's a possibility. We want to think about saving for college, but that sort of "traditional" - I'll put traditional in air quotes. There always been a lot of different paths, but that the traditional four year path, college path, kind of residential university, it's not for everyone. And there are lots of other kinds of educational options, short term certificate programs and trade schools. And, you know, even starting your own business, maybe maybe your child has that entrepreneurial spirit, they need a little bit of seed money, and you want to prepare for that. So I think there's lots of reasons to be saving for your child's future, college tends to be the most expensive one we think of and one that you want to be prepared for if it's a possibility. But if you save it all, I think there's multiple uses that that that money could potentially be put to in the future.

Hannah Choi 05:49

So like, why why should we see why should we be thinking ahead and preparing other than the obvious that, like you just said, it's very expensive?

06:00

Yeah, I think that really is, is the biggest driving factor that college is such a huge expense and much more expensive than when you are i Hannah, we're going to college or certainly when parents were probably went to college, if the if they went to college college costs have been increasing at quite a rate more than you know, the general inflation rate in the economy over the last, you know, 20 3040 years, actually, since 1990, college costs have doubled. Wow. So it's quite an expense, and one that you want to be prepared for, you know, there are different ways to pay for college. And certainly one that's gotten a lot of attention lately is student loans. Student loans are of course an option to help you pay for college. But of course, when you borrow student loans, they charge you interest you save, you're the one that's occurring, the interest. So, you know, if you're a parent thinking about let the interest work for you, rather than against you, if you do the math on it. saving for college, as opposed to borrowing for college can actually cut your college costs in half. When you think about all of that interest, so it's really expensive, it's getting more expensive, and preparing for it will, will help I think, will help your stress levels. Yeah, you have a chunk of change, set aside for college. And it will actually having that chunk of change set aside will, in the end reduce your college costs as opposed to borrowing. And I should also I think throw out there. Sometimes people are worried about saving for college because they think it will cost them college financial aid and I save for college, they won't give me financial aid. That is just not the case, your savings does feed into the financial aid calculations. But to a very small extent, that's good to know, the way the financial aid formula works is it's mostly driven by the family's income, not their assets, not their savings. And so if we want to just put numbers to it, so folks understand in the financial aid formula, you're the formula expects you to contribute something like 5% of your assets to college each year. Okay? Meaning so if you saved $10,000, for college, that might cost you $500 in financial aid eligibility, though, you're still up by 9500, you could you know, that helps you pay for college, much, much more than the loss of financial aid hurts, I would encourage everybody who has the means and I'm not talking about a huge amount of means, you know, every little bit helps to start saving, it'll just make your life easier in the end.

Hannah Choi 09:08

And I love that you pointed out that it reduces stress because as our listeners know, if they've been listening for a while they've heard me talk about how stress really, really impacts our ability to access our executive function skills, which as we'll explore today, you really do need to access those if you're going to be planning and prioritizing and managing and organizing. Or all of your finances for the future. So 100% Yeah, yeah, great. So what do you think stops people from saving I mean, other than what you just mentioned, do you think that people's biggest reason for not saving Yeah,

Shannon Vasconcelos 09:50

I think so that it's the whole prospect is just intimidating. And yeah, it you know, it's this the stress of it, but like you say that It can just make that executive functioning that's required just really difficult. And I mean, this is part of the stress just that the numbers are so overwhelming and it's intimidating to think they can get into a headspace. Well, it's impossible to save that much. So they just don't try that. That's the worst thing you can do to let yourself get to the space of I'm so overwhelmed. I'm not even going to try.

Hannah Choi 10:34

Yeah, right. So doing a little exploration and learning. As we know, knowledge is power. So as doing maybe listening today to today's episode, and, and taking that first step to figure out how can I do this in the least overwhelming way? And yeah, I am a classic example of that. No, I don't like math. So I have like a visceral reaction to anything that has to do with numbers. Even conceptually, I don't like thinking. So. So this, I'm really looking forward to learning this today. So

Shannon Vasconcelos 11:10

yeah, and I think what I tend to recommend for folks who are just feeling overwhelmed that so much, I'll never be able to do it. I don't know how to approach this. I always recommend breaking the process that this sort of big, overwhelming process of saving for college, break it down into manageable steps.

Hannah Choi 11:32

Yes. Are you looking for a job as an executive function coach?

Shannon Vasconcelos 11:40

I've gotta say, for my kids college, that's that side hustle, maybe?

Hannah Choi 11:47

Yeah, I mean, that's, that's pretty much my go to strategy for myself. And for any of my clients, or anyone who is asking like, this feels really big and scary. What should I do? And you're right, break it down.

Shannon Vasconcelos 12:00

Yeah. And in my mind, how I organize it. In my mind, I think there are forced steps for basic questions to ask yourself, once you've made the decision I'm going to save for college. So that's the first first hurdle to get, I'm going to do it and you do that, then I think there's four questions to ask yourself to, to bring this big goal into fruition and take it step by step. And I think that first,

Hannah Choi 12:33

if you're listening, get a pen and paper and start getting organized.

12:40

One hundred percent! Brilliant tip. Yes. So I think the first question to ask yourself is what kind of account do I want to use to save for college and this is something that I work with families all the time on making this decision, because there's different places you could put your money, the I would say, most popular option for saving for college is using what's called a 529 account. And that's an account that when you save your money over the years in this account, when the time comes to make a withdrawal, you if you withdraw the money for college, so it's sort of like as a 401K is for your retirement, it's for this specific purpose. 529 is for college. And if you're withdrawing the money for college expenses, you don't have to pay any taxes on the earnings of your 529. So it gives you that nice tax bonus, yeah, if you use this money, how it was intended, which was for college, so I would think that's the most popular option, the 529 that people are using to save for college. It does have that restriction, though, that this money is supposed to be used for college to get that tax break. If you use the money for anything other than college, you have to pay taxes on the earnings plus a 10% penalty. No, wow. So you want to be you know, fairly confident you're going to use this money for college, you're not going to have to pull it out for something else. But some people are uncomfortable with that they want more flexibility. So they will just use a regular plain ol' savings account or investment account that they could use for college or for anything else, right. So if you're in that space, where I'm not sure if my kids gonna go to college, I don't like my money being tied up. What if I needed for some emergency, you could just use a regular savings account or regular investment account. You forego the tax break. You know, you'd have to pay taxes on the growth of the account, but you get more flexibility. So that's definitely sort of a decision that people have to weigh what's more important to me this this tax break and saving more money or having more flexibility. There's a nice sort of compromise option that that some folks will choose to use, and it sounds a little weird at first and but it's using a Roth IRA to save for college, a Roth IRA is supposed to be a retirement account. And actually, if you're going to be over 59 and a half, when your kids go to college, Ah, okay, it can be a really great option, because that's their, the way that a Roth IRA works is very actually similar to a 529. Tax wise with a 529, you put the money in, it's after tax money that goes in, but you don't pay any taxes on the growth, if you use the money for college with a Roth IRA, after tax money goes in, you don't pay any money on the growth, if you're over age 59 and a half. Okay?

Shannon Vasconcelos 15:49

If you're an older you had your kids in your 40s, exactly,

15:53

The Roth IRA gets you the same tax benefit as a 529. But without the restriction. And even if you're a younger parents, some younger parents will still use a Roth IRA for college savings, because they have this, I'm getting real kind of into the weeds wonky here with it with this option. But with a Roth IRA, your earnings are sort of tied up into in the account till after you're 59 and a half. But your contributions, the amount that you put in, you can get out at any time for any reason. And you've already paid taxes on that money, there's no tax implication. So some younger parents will use a Roth IRA assuming I will pull the money out the the contributions out the principal out to pay for college, but I'll leave the earnings in the account till after I'm 59 and happier those for my retirement. So it's sort of you're gonna use it as sort of a dual purpose count account because it sort of gets you summit, the tax breaks, but some of the flexibility to so that can that can be a good option for for some people, but but there's a number of options. So thinking about what your priorities are, in turn what's matters to me saving the most money in terms of tax regs, what matters to me having flexibility that will I think drive that first decision of Okay, where am I going to cut this college saving?

Hannah Choi 17:11

Yeah, yeah. That's, that's really great information.

17:16

Yeah. And then I would say the next decision to make is once you know, the kind of account you're going to use, okay, well, who, who's the actual sort of business or plan manager or bank that I'm going to use to hold this and you can open a 529 account with a variety of investment managers, the way it works at the 520 Nights, specifically, is that every state has their own. But you're actually allowed to invest in any states five times. So I could live in California, but invest in the New York State 529. And different plan managers will have different fee structures that look at slightly different investment options, though, they tend to be relatively consistent across the board, you can probably read looking for basic investment options, they'll probably have it in any 520 units, you want to look at the fees, many states offer a state tax incentive to stick with your home state plan. Okay. So that's usually enough incentive if your state has one of those state tax break to stick with your home states plans, and that can make the decision easy if it's going to be a 529. If it's going to be like a regular savings account or a Roth IRA, something like that, that's more flexible than looking at companies that you've worked with, who have you had a good experience with, again, what kind of what kind of interest Did they give you? Or what kind of fees do they charge that can help you make that kind of next level? This is Yeah.

Hannah Choi 18:55

So, is there a place that is there a place that people can go that has all of that information altogether? Or do you just need to go and research each state

19:06

if we're talking about 529, like defined college savings accounts, specifically, my favorite website to research that is a website called Savingforcollege.com. All the detailed information about all the different states' 529. They will tell you if your state has a state tax break, you can do like side by side comparisons. They have a nice list you can find on their website of this dates with the you can sort the list of all the different state 520 names by who charges the lowest fees. I think that's a good starting place. Cool. So yeah, that's that's a really good place to find. Identify who you want is your plan manager. So it's the type of account you want. Who do you want is your plan manager. And then what type of investments do you want to hold in the account. So again, kinda like a 401 K, that a 529 is similar to a 401k, where you've chosen this 529, perhaps, that you want to invest in, and you're given a list of maybe 10, or 20, mutual funds that you can hold the money in within that 529. And some more stocks, and some are more bonds, some 529 types have straight savings account options. But to make this decision, pretty easy for folks who don't really feel comfortable picking investments, they're not sure what they should do just about every 529 out there has what they call an age based fund or target date fund, where you can just choose the mutual fund based baby for me, yes, 100% makes it so much easier, based on your child's age. So it might be like the college 2025 fund the college 2030 fund based on when your kid is going to go to college, and what happens and you just put the money in that fund, that's all you have to do, you don't have to think about anything else. And over the years, as your kids get closer to college age, the makeup of that fund becomes more conservative. So it's sort of banking on the fact that when your kids are quite young, you can be a little bit more risky, be a little bit more aggressive with your investment, as they get closer to college age, you probably want to be a little bit more conservative, be safer, you don't want to, you know, the stock market to take a downturn and all of a sudden you lose all your college savings you want, right? Right, gradually grow more conservative. That's what most kinds of financial experts would would recommend. And these age based funds do it for you. So that's one very easy option for folks who are kind of intimidated by the prospect of choosing particular investments,

Hannah Choi 21:55

right? Yeah, I'm very lucky because my husband is it manages all that stuff for us. And he is not overwhelmed by that kind of thing. So I was just thinking, if you if you have a partner who can take that on and is happy to get involved, then that's great. If you if your partner or you don't have a partner to work with you on it, it's really great to hear that there are options for people like me, who'd be like, I don't know.

22:22

Completely, yeah, it makes things a whole lot easier. And I think, again, 520 nines as like kind of the sort of primary college Pacific savings account. They were sort of design with regular folks in mind, you don't have to be an investment expert, to get a 520 started. And then I would just say like, final question you need to ask. So yeah, I know, I want to save in a 529, let's say, and I live in Massachusetts, and they have a state tax break for choosing our plants. I'm going to go with the Massachusetts State Plan, that's who I'm going to house my money with. I'm not sure what to do with investments. So maybe I'm gonna choose the age based fund within that 529 for my child's age. Okay, I've gotten through the first few questions. Final question, how much do I say, Yes, this can be an intimidating one for folks. And what I tell folks is not to stress out too much about it. If you are maybe more like your husband, you're a real numbers oriented person really wants to kind of dig into the data. There are good college savings calculators online, on that saving for college.com website, they have a nice college savings calculator that can help you with setting some savings goal, okay, I know my child is going to likely go to college in this year. So I have 10 years to save or five years to save whatever it is. And this is the calculator will tell you okay, this is what college costs are anticipated to be the cost of an average college at that time, this is how much you'd have to put away on a monthly basis to reach that goal. So for real data, numbers oriented people, I'd absolutely recommend running one of those college savings calculators. The flipside to that is I find that running those calculators can be scary for folks sometimes, very, very often. So don't be surprised if this happens to you very often it shows you a number you could not conceive in your wildest dreams. Yeah, so what I tell people is that is okay, do not get bogged down by that do not worry about that. There are other ways to help pay for college. There are the student loans. We already talked about their scholarships, there's grants. There are monthly payment plans where you can pay the college bill like spread out on a monthly basis as opposed to like having to come up with the money. There's all these different ways to pay for college. You do not have to save that full amount of college that the calculator might tell you, right? Honestly, almost nobody can do that. So that, that turned you off the prospect of savings. If you want to see the numbers to help you set yourself some goals, and you can afford those numbers fantastic. If you can't afford them, don't worry about it, I always tell people just do what you can take a look at your budget, see if if saving for college or for your kids future in some way is important to you. And you don't you're not able to save as much as you'd like. Or there are other places that you could cut back. But just do what you can, any amount that you save is going to help you it's going to make your costs lower in the end again, because you've saved some instead of borrowing it all. It's gonna reduce, reduce those stress levels. So just do whatever you can don't stress out about the big numbers, every single little bit helps.

Hannah Choi 26:10

And listen to a really great episode that College Coach did on scholarships. And like my daughter's in ninth grade. So it's still pretty early, but I know it's going to happen fast. And I have to say after listening to that episode, I felt a lot better. Like, oh, there are so many options for scholarships out there. Yes, it requires a lot of work. And a lot of planning. A lot of executive function skills come into place that come into play. But yeah, all in all, hope is not lost.

26:38

No. And I will tell you, the the numbers bear out that add I think these these numbers, they helped me a lot what I think about I think they help other people at public colleges, about three quarters of students receive some type of scholarship or grant discount, they are not paying full price at private colleges that have those super high sticker prices. Almost 90% of students are getting a discount. So in fact, almost nobody is paying those super high standard prices that you see discounts are readily available. Again, it's just a matter of putting the work in to find the discounts applying for need based financial aid, if you might qualify for that looking for schools where you might stand out be above average, that will maximize your chances of getting merit scholarships, so So yeah, don't be turned off by the full giant, huge sticker prices, because almost nobody is actually paying them.

Hannah Choi 27:44

Yeah, that's good to know. Yeah. Yeah, I was very lucky when I went to college. Well, I guess you could I don't know if it's luck or not. But I very much qualified for need based. So I hardly paid anything. And I went to a private, expensive private college, and we hardly paid anything. So yeah, great. Actually,

Shannon Vasconcelos 28:06

it seems to be the case that those super pricey expensive private schools, they've got sort of a lot of money to play with, they tend to be the most generous with, particularly the need based financial aid. So don't get scared off by the sticker prices. There are absolutely ways to get discounts and most people aren't paying the whole huge sticker price.

Hannah Choi 28:29

Yeah. So thinking about answering those four questions. It, it really helps to break it down. And at the same time, you still have to like, track all that information. Do you have any suggestions for staying organized and not letting not letting all that become overwhelming?

28:50

Yeah, I think that it's great, too. And it's great for saving for college. It's great for achieving all your financial goals. really setting up your own budget, or I prefer to call them spending plans. I think people are scared off by the B word. Budget. What do you think of it as a spending plan? It's okay, this is your income. This is what I get to spend this is this is a positive? How do I want to spend my money? What do I value? And so keeping track of what you're actually spending your money on? does it align with what you value what you determined because you've thought about this, you've got organized. You know, keeping track of that spending in an organized manner is I think really critical to be able to save effectively for college and really kind of any financial goal that you might have is taking a look at the numbers and not just spending sort of money mindlessly, which we all do on occasion, yeah. That to a minimum and making sure your spending and alignment, spending and saving and alignment with what is most important to you, is, I think, really, really key to this process.

Hannah Choi 30:17

We just, we just started using it at the beginning of this calendar year, we just started using a budgeting app, a spending plan app called called, You Need a Budget, which is colloquially colloquially called YNAB. And and I love that you said does it align with your values, and that's what's been really neat about, about tracking and watching how we spend our money, and what we spend it on is showing us what our values are, and where the money is going to. And it's, it's, it's just made me a lot more aware of how we spend our money. And, and I catch myself saying, you know, is this in alignment with my values, whatever it is. And it's, as someone who is anxious about money, it has really helped me feel better about about how about spending and about saving our money, which has been really, really great.

31:18

That's fantastic. And yeah, people who use that you need a budget app are devoted to it, I haven't personally used it.

Shannon Vasconcelos 31:28

Yeah, it's got a cult following.

31:30

So if you're in the market, like that's one that you that you might want to look at, it doesn't work for everybody, some people are, like, I just You just like kind of a regular spreadsheet, I just get and that that like works for me. But like everybody is so different. And that that is one that a lot of people love. So that's what it's not so

Hannah Choi 31:50

Yeah, it's very well loved by many people who have ADHD, because of something about like, how it's organized, it's it's very motivating to us. And it's, there's just like a huge population of people with ADHD who really love what they have.

32:06

So I totally get that. Yeah, that makes a lot of sense. Yeah. And I would, I would also say, just sort of set up like a system to review your college savings progress regularly. And this is not the kind of thing I don't think that you have to be like in your college savings account, you know, on online site, like, every day did it go up. That will drive you crazy. But maybe set like a once a year, check in, you've set it up, maybe with automatic investments that I really, really recommend that will help keep people on track. Like don't give yourself a chance to spend the money. You can automatic deposit automatic deposits every month. But like make a an effort, maybe put something on the calendar once a year to just take a look at it review your college savings plan is what you're doing still working for you? Or do you want to change things I think having some level of flexibility is really important to being successful with with college savings are probably the most kind of long term financial goal. You know, think about things like maybe you've had a job change. So maybe, maybe you're making more money now. So think about that automatic deposit that you set up, maybe could you increase that, or maybe the maybe you've gotten laid off or you've chosen to take a step back and work maybe you have less money available. And maybe you need to adjust what you're putting into the college savings because again, it's spending in alignment with their values, maybe you've decided you value some some other things that need to take priority over college savings at this point. So be thinking about those things set up sort of an maybe an annual check in to think about that, though, the mounts that you're saving. I also think one tip that I think is really helpful to folks with young kids. If you're thinking about this early, which is awesome. You've got a baby or toddler and you want to start saving for college, which is great time on your side. That's fantastic. Yeah. But you might not have a ton of money if you are paying for like full time childcare, right? A lot. A lot left in your budget for college saving. And if you can do a little if you can do $25 a month, $50 a month. I definitely recommend doing it because every little bit does help. But what about when your child enters kindergarten if they're going into the public school system, you don't have to pay 1000 2000 Whatever it is, that opens up more ability to save for college.

Hannah Choi 34:55

You take that money wouldn't that be great if you could take all of that money you've been putting there and stick it right In the 529.

35:00

One hundred percent, that will like, put jet fire into your college savings. But if you don't think about it, if you don't do this kind of checking, it becomes really easy to just that money trickles out and is spent on other things. And you all of a sudden, where did I used to have to pay $2,000 a month for child care now, I don't feel $2,000 A month richer, because going out into the world and all these different ways, but make that concerted effort to check in, oh, I've got I'm gonna bout to have this new money in my budget, I can direct all of it would be great, or even some portion of it into college savings. That will really kind of supercharge your savings and child care, I think is the most obvious one, a lot of parents of young kids are still paying back their own student loans. So again, maybe you can't afford a ton right now, because you're working on paying off your own student loan. But once those student loan payments, and maybe that's an opportunity to supercharge your savings, so So checking in kind of regularly as circumstances change. And I think also your your college expectations could change. And that could affect, you know, that type of account that you want to save. And that's something that you can change along the way. So maybe when your kids were young, you weren't really sure is college going to be in their future or not, maybe you weren't really comfortable doing that 529, where you get the great tax break for college. But if you use it for something else, you got to have to pay a penalty. So maybe that scared you off the 529 at first and you just wanted to use a regular savings account to get started. And then that was working for you. But as the years tick by maybe you realize, I'm pretty sure my kids are going to go to college, this is going to be what we're going to use this money for. Maybe at that point, instead of doing the regular savings account that doesn't get you a tax break, maybe you start putting money into a 529 later on once you're more confident that college is in the future. And then I think it can also you know work in reverse, maybe you started saving in a 529 when your kid was a baby. And as they get further on in their, you know their high school years, you you come to realize they're not really interested in college, this isn't the path that they're on, then maybe you can switch to start saving into a more flexible house. So just setting up that kind of, you can do it at different intervals, I think, at least early on, like an annual check in is a good point to just set aside a little time we put it on the calendar, you know, reoccurring appointment. Now just set aside a time look at your budget, look at how your savings is doing look at where it is, is this plan that I set up initially still working for me? Or is it time to do some adjustments? I think that will help folks along the way.

Hannah Choi 37:59

I love that that's a great example of how cognitive flexibility the executive function skill of cognitive flexibility comes in. Because you have to be able to look and say like, this is the plan that I originally had, or that we originally had, is that still the case? Oh, it's not okay, well, what's something else that we can do? And, and that can be really challenging for people. So having the additional knowledge about the other options is a great way to make it even more easy to be flexible. So completely.

38:30

And, and, and sort of said this, but I think to reiterate, you know, being flexible, I don't think means being like reactive again. Yeah, I don't recommend like, looking at your account every day. Oh, no, it went down a little bit, I need to pull my money out. It's, it's not that kind of you have to be able to sort of deal with your emotions, a little bit of doing any kind of investment is, you know, if you're in the stock market at all stocks go up and down, right. You know, so you can't be sort of, you need to be able to control your your emotions to some extended, stocks went down. My Accounts down today, or maybe even this year, stocks are down. That does not make me happy. I wish it was that way. But I know this is a long term endeavor. And this doesn't change my overall goals. So I'm not going to panic, you know, and I see that and I'm going to, I'm going to stick to my plan that I know is right for me at this time. And I will review that plan annually and I'm willing to change if the plan doesn't make sense anymore. But this this knee jerk reaction I'm having on this one day does not mean the plan doesn't work anymore. It's understanding that kind of upfront And I think knowing, doing that sort of internal introspection, to know your risk tolerance is important upfront, if you are going to be in the stock market at all, you have to be able to deal with the with those ups and downs, you have to be, you know, willing to take those risks for the potential of greater return. If that does not sit well with you, if you're like, this will just stress me out every day, then maybe you shouldn't be in the stock market, like you think about like, what's the like, absolute best, like financial thing is not always what's best for your life. Day to day living, if you have a very low risk tolerance, maybe you think about using a lower kind of risky investments. So like that high yield savings account, or a more conservative kind of fund, I think there's actually I neglected to mention, in addition to 529s or like the kind of most popular type of college savings account, there's another one that is available in some states, not all states, but some states have a prepaid tuition plan. Okay, tuition plan, what you're basically doing is kind of locking in tomorrow's tuition at today's prices. And they generally work they're you, unlike 529s where you can invest in any states 529. And you can use the money for college in any state, they're, they're more flexible. With prepaid tuition plans, you're locking in tuition, usually at your home state colleges, okay. So if you're fairly confident that your child is like likely to attend an in state public university prepaid plans can be a really good option. And what they're essentially doing again, you're kind of locking in that tuition. at today's prices, what's kind of happening behind the scenes is a guaranteed rate of return, if you wish and goes up 3%. Every year, your investment makes 3% Every year, so you have the equivalent, and that's guaranteed. So prepaid tuition plans are, you know, a lower risk option, you're not subject to the whims of the stock market, every year, the flip side, the more negative side to it is, you're also probably not going to make a ton of money, tuition, what we've been seeing lately is kind of two or 3%, average annual tuition increases, so you're going to make a decent rate of return, I think mind blowing, but you're also not going to lose money. So again, thinking about your risk tolerance, maybe the prepaid tuition plan sounds better to you than 529 money in the stock market. And I should say that even though they're sort of tied to in state tuition rates, you're not 100% locked into to your child attending an in state public university, oh, that usually happens if they choose an out of state school or private school, you get your money back, plus some sort of minimal return returns.

Hannah Choi 38:58

So, you don't lose anything.

41:02

Kind of a lower risk option. So again, thinking about your risk tolerance. And if you feel like seeing the stock market go down, it's going to make you lose your mind and give up on saving altogether. Like a prepaid plan is a better option for you.

Hannah Choi 43:50

Because they're such a such a great example of how important it is to have this self awareness of, of, you know, what like, like you said, your own risk tolerance, or even your kids like to teach your kids like, you know, what do you want out of your college experience? Do you want to stay close to home? Do you want a bigger school, you know, or do you want a smaller school or, you know, if they know what they want to be when they grow up, then you'd look at that like that, that local public school and see if it has what they're interested in. So just that self awareness, metacognition is the is a good executive function skill, just knowing like how we tick is so important in that in the ability to be proactive instead of reactive.

Shannon Vasconcelos 44:34

makes so much sense. Totally.

Hannah Choi 44:37

Yeah, that's great. And, and also, like you said, that emotional regulation piece, and not having that reactive need knee jerk reaction and seeing Yes, it's a marathon. It's not a sprint, where, hopefully it's a marathon. Hopefully you've started this planning earlier. That makes me think like, what if? What if? What if plans change and you do have to be really flexible and your kid is like, actually, you know what I want to go to college not started saving until they're maybe a junior or a senior in high school is all are you? Are you kind of out? You know, I don't want to say screwed, are you? Is it too late for you? Or is there something still that you could do?

Shannon Vasconcelos 45:21

No, I would say it is never too late to save for college, I like to like to say it's never too early to get started. It's never too late to get started. Where ever you are at, in this process, whether you got small, like elementary schoolers at home or you've got again that like junior in high school, and you haven't started savings yet. It's never too late to make that decision. And again, like crossing that hurdle. Yes, I'm gonna do that. That is the most important thing and everything else can flow from there. And is it realistic, if you're starting junior year in high school to say I'm going to save 100% of college costs? Probably not. But that's okay. Every single little bit helps every dollar that you save, that you don't have to now borrow is going to make a big difference to you. In terms of, again, how much that that college education costs you in the end. And again, like your stress levels, yeah, I'm not going to have enough to totally pay for college out of my savings account. But I'm going to have some, I'm gonna have a low, maybe I can pay for books. That alone is a big step and a big stress reducer. So wherever you're at just making the decision to get started, I think is key. And again, you want to think about okay, we don't have a long time horizon anymore. So maybe I don't want to be in super risky investments, maybe I want to play it a little safer.

Hannah Choi 46:53

But what about for, what about for teens who work themselves and they make their own money? And that they would like to save for college? Should they just put it into their own 529? Or is there some other sort of more beneficial account that a team could set up?

47:10

I think you could do it a couple of different ways. Like if you're sure this money is going to be you want to use it for college tuition, or food and housing, those are all kind of eligible 529 expenses, then yes, absolutely. Put it into the 529, again, gets you a little tax break. Now the later you're starting this kind of I would say the less significant that 529 tax break is. Because it's you get the growth on the account tax free, that's the benefit to the 529 Money's only going to be in there a few months, like there's just not that much time for the money to grow, the growth is not going to be that huge. Again, there'll be a little savings there and all likelihood, but you want to weigh like how important is tying the money up for this specific use. And compared to the tax break, you're gonna get out of it. But I think if you and one sort of cognitively nice thing about the 529, I think it lacks flexibility. You think of that as a negative buy for somebody who might be tempted to spend this money on something else, having it tied up where you have to pay a penalty, get it out, that can be a nice incentive to keep it there.

Hannah Choi 48:34

Yeah. So if you struggle with self control, built in built in strategy, totally

48:42

Yeah. So So a student who is making their own money could put it into their 529. They could also just put it into, like we met like a high yield savings account that gives them some more flexibility. Like maybe maybe it's not necessarily money that you're going to use for tuition, but it's maybe to pay for books, or it's to pay for, you know, pizza on a Friday night, or one of those other kinds of expenses that might make for a great college experience. Maybe you want to be able to buy tickets to the football games on campus, or the concerts and kids like those other things that aren't a direct college expense that the 529 intention, just putting it into a regular savings account, where you have total flexibility within the money for a student that might be very appropriate for them so they can use it for all those other fun college expenses. Tuition, maybe not that fun, but college expenses.

Hannah Choi 49:42

Yeah, it's so important to to do those fun things because college isn't just about the academics. It's so much about the social part. So that's great. All right. So I have to say like I feel better after hearing all this. I also feel like if I was not married to the person I'm married to, I would still need some help. What if you're like me, and you're still like sweaty palms like this still feels overwhelming. Who can you? I mean, I could reach out to you, I suppose.

Shannon Vasconcelos 50:19

Call me and I'm always here.

50:26

Honestly, that's, that's about half of my job. So that's totally fine to do that. But yeah, I think that asking for help in this process because it is so big because it is overwhelming, I think is a really important skill to have. And I actually think about asking for help when it when it comes to paying for college, I think about it in a few different ways. One is asking for help from friends and family to reach your college savings goals. Because it is a big number. It for most people saving that full price is not really possible on their own. So most 529 plans have a feature where you can ask friends and family for contributions to your colleges savings account, maybe for birthdays or holidays, I do this for my kids as a way like to send a little automatic email to the grandparents. And so and so's birthday is coming up, he would love a contribution to his college savings fun. And I have actually found, like family being like, surprisingly, like excited about it like thing to do, this isn't going to be a toy that gets broken in five minutes, or they're gonna like outgrow this is like really substantial way to help it small amounts at a time. But like every birthday, like a little contribution to the college savings fund, like again, it adds up over time. So I would not be shy about asking for help from friends and family in that way, I found that they're actually they think it's cool and fun and very amenable to that.

Hannah Choi 52:20

We have, we have a family friend who is kind of like a third set of grandparents for kids. And she used to do very similarly what you do, and and so when my kids were little little she would buy them gifts. And then at one point, I think when they were maybe four or five, she switched. And now she just gives them something very small, like just like a book or something. And then she sends a check with the thing, it says "for the 529".

52:49

Yeah, totally. Yeah. So I think that that's a great thing to do. You don't have to go this alone in that way in terms of getting to the numbers that you want. I also think about asking for help in terms of down the line, applying for financial aid. And, again, almost nobody pays full price for college that financial aid is available. So when down the line certainly apply for it asked for that help when you need it, thinking about it. Now, if your kids are younger, like I think just knowing that that help is available down the line, it is helpful in terms of removing some of the intimidation factor, I have to save it, I'm going to apply for financial aid when my kids is senior in high school. You don't have to do it all yourself. So just knowing that upfront and certainly, oh my god, please apply for financial aid. Like that it's not something to be scared again, when you take the things that are intimidating, something like filling out the forms are in the air intimidating, please, please do it. And please ask for help with that if you need it. But that that financial assistance is available. So ask for that down the line and going into things know that that is available. And then finally, in terms of asking you for help, like again, with the whole setup of this whole process or I'm not sure about these decisions I've made I know these four questions, but I'm not sure what the right answer is. You can actually literally ask for you know professional help with that you can go to you have a financial planner that you're already working with or you're looking for a financial planner can can help with the setting up of a college savings account. If you're just like look, I cannot deal with it. Again, I want to let people know they've made them pretty user friendly. Like you can do it on your own but if it's something like not worth the stress to you go to a financial planner, they can set up these accounts for you. Or you can go to to us at Bright Horizons College Coach and educational counselor that can that can help you work through these questions and help you make you You know, the right decisions for you. And again, we can check in with people I would actually recommend we work with with folks families privately. So you can go to our website getintocollege.com. And, and reach out to us that way. But we also work as an employer benefit with a lot of companies. So it's something to check in with your employer, do you offer college counseling as an employee benefit? And because we do, we work with a lot of companies, and so employees of companies hire us to work with their employees for free. It's really cool. Yeah. And sometimes we're sort of like an under the radar benefit. And people don't realize that that we're there. Sometimes they realize it, but it's not till their kids are senior in high school. They'll help at that, at that point with the college application process and the financial aid application process. But we can work with you when you have a newborn baby and are thinking about how to save for college. So I would say, check with your employer to see if they offer Bright Horizons college coach as an employee benefit, and then we can help you for free. Otherwise, go to our website, get into college.com. And we're happy to help.

Hannah Choi 56:08

That's awesome. Cool. Well, I think that is if you can, if you can stay organized, or get organized. And ask yourself those four questions, regulate your emotions, take some time to really reflect on what you are like as a person, how you can handle this, what kind of help you do need. And if you do need, use those self advocacy skills and ask for the help that you need. And go into that meeting with some concrete questions that you've come up with. Because you have taken the time to figure out what you need and what questions you have. I think that sounds like a great recipe for success. Combining financial planning with executive function skills. I love it. I love it. Thank you so much. This is really interesting and also very calming. I feel good. I feel better about it. I assume so. And also. Yeah, good. Just listening to you speak so fluently about him like, oh, it's must not be that big of a deal. Because she's not tripping over her words so it must not be that hard

57:22

You can do it. And I know you're already doing it. You can do it. And everyone listening. This is something that you can do again, ask for help if you need it. But but you can do this and every little bit helps. Great. All right.

Hannah Choi 57:37

Well, thanks again, Shannon. I really appreciate the time, your time today and all the great information that you shared is awesome,

57:43

Oh, you're so welcome.

Hannah Choi 57:47

And that's our show for today. Thanks for taking time out of your day to listen and I hope you learned something and maybe found some relief like I did. Just because it's money doesn't mean it has to be awful. You can find links to the resources that Shannon suggested in the show notes. And if you know anyone who might benefit from this episode, you can share it with them. If you have any questions or topic suggestions you can reach out to me at podcast at beyond booksmart.com I'd love to hear from you. Please subscribe to focus forward on Apple and Google podcasts, Spotify, or wherever else you get your podcasts. If you listen on Apple podcasts or Spotify, you can give us a boost by giving us a five star rating. Sign up for our newsletter at beyond booksmart.com/podcast. We'll let you know when new episodes drop and we'll share information related to the topic. Our talented editor and producer is Sean Potts. Our Ultra creative content marketer is Justice Abbott and a very special thanks to Ian Fisher at Bright Horizons College coach for connecting me with Shannon. Thanks for listening