Can I afford to put my kids through college?
It’s important to have your education expenses clearly defined and funded in your client’s Fact Finder before attempting the use the Education Planning suite of reports to answer this question.
There are a few key settings within the education expenses to be aware of, including:
- The Dedicated Funding Sources Report, which is where you should attach 529s or accounts specifically dedicated to funding the child’s education. An If Dedicated Funding Is Exhausted setting exists on the Funding tab of the Education Expense and has two settings Fund the Expense Through Normal Cash Flow and Stop Funding the Expense. Typically when solving for savings needs, it’s best to select Stop Funding the Expense.
- Savings Rate for Solution Reports allows you to define the projected growth of additional savings used in the Education Planning reports.
Review these expense settings carefully, and once you have a strong base case for your education plan, move onto reports that will answer questions about education funding.
- The Cost of Education Report breaks down each child’s expenses individually, showing how each year of their education is fully or partially funded, as well as annual and total costs.
- The Funding Your Education Report continues to break out the education goals for each child individually, but focuses on the current status of funding, respective to each of the education funding needs. This report details the dedicated funds available, current funding, and visualizes the funds versus withdrawals. When a shortfall occurs, the amount of the shortfall and percentage underfunded are displayed. In addition, if you’ve allowed the expense to fund through normal cash flow, Non-Dedicated Withdrawals are also visualized.
Now that you’ve had the opportunity to review costs and funding if a shortfall has been identified, it’s the perfect time to explore potential solutions to any funding shortfalls in the Options for Meeting Needs report.
- The Options for Meeting Needs Report looks at the funding shortfall of the client’s education goal and provides solutions to close the funding gap. This report details how much more they need save each month, put aside in bulk now, or if necessary, what kind of reduction in costs would be required to meet their goal.
There are many additional reports that can break down the funding and spending details or analyze the cost of waiting to fund but these provide the foundation of any education planning report in eMoney.
