Ever heard of the 5-hour rule?
It’s where you devote an hour a day to learn, think, and reflect. It’s a common practice among a lot of well-known, successful people, including Oprah Winfrey and Elon Musk.
Learning something an hour a day doesn’t necessarily mean textbooks and classic novels, either. It could be listening to a new podcast, reading an article or two (I’ve got one for you today), or even listening to a radio show.
The point here is, it helps you see the world differently.
And that’s valuable. It’s one of the reasons why the college experience matters. Yes, going to college is a way to land a profession, but you also learn about the world and new perspectives along the way.
Now, college isn’t for everyone, but if it’s the path your child is taking, there are some things you need to make sure you’re preparing for before they fly the coop.
Consider today’s article as a way to kick off your 5-hour rule for this week. Read through the college-prep list I’ve compiled below that discusses federal student aid and some other important details you’ll need to communicate with your child about. Then spend some time processing how to accomplish what I’m suggesting here.
Federal Student Aid & Other Things Redding Parents Should Discuss
“There is no such thing as a perfect parent. So just be a real one.” – Sue Klebold
Whether you’re sending your child off to college this year or have one that will be going that route soon, making sure you (and they) are prepared for it is a thing every Redding parent wants … but maybe, doesn’t quite know how to do entirely.
As a trusted tax professional in your life, I can help you think through how to prepare them financially (whether applying for federal student aid and scholarships, putting together a budget, or some other important to-do’s). It’s something I care about, alongside you.
There are quite a few financial ducks that need to get lined up before that day. What can you plan for now so you and your child are set up well?
Here are my top five items you’ll want to address in the next few months:
#1 Have an open and honest conversation with them about the cost of college
Granted, the time for this one may have already passed, but it’s still worth talking about. Tell your child how much you’ve saved/are prepared to contribute and what that will actually cover. Encourage them to carefully consider how much they want to spend on various needs, including tuition.
Make sure your child also understands the implications of borrowing — for example, if they receive 20K in federal student aid, they could end up paying $250 per month for the next 10 years. This will help your child be more prepared to make smart decisions about their life, their money, and their future.
#2 Help them budget, pack, and know ways to save
Once approved for federal student aid, you need to make sure your child knows how to budget with this amount for their expenses and needs. We all know how easy it is to get excited about credit cards and then max them out with unnecessary spending. Help them understand the cost of living on their own, including essentials like textbooks and unexpected expenses like car repairs or additional textbooks required. Resources like Amazon Student Prime can help with textbook costs, while budgeting apps and tools can be invaluable.
While you’re at it, look over this college packing list to see what your child might need and start hitting up those summer garage sales.
#3 Make sure you’ve got these legal documents
Now that your child is an adult, there are limitations on how you can legally assist them (I’m not talking about federal student aid here). The following documents allow you as the parent to still help and care for them and have access to important information:
- A Health Care Power of Attorney – Legal permission to care for your adult child and make the necessary medical decisions if something happens to them.
- A Financial Power of Attorney — Power to help your child with financial decisions as they take their first steps into adulthood.
- A HIPAA authorization — Gives access to your adult child’s medical records. Without this, you’ll be barred from access to their healthcare information.
- FERPA authorization — Allows access to your child’s school records (whichever ones they choose to give you access to).
#4 Applying for scholarships, the FAFSA, and other loans
Free money is the best kind of college help, so that’s why you want to encourage your child to be diligent in applying for scholarships. Free scholarship tools like Scholly by Sallie help you find which ones your child is eligible for. Your child can even visit their college’s student support services office to see if anything’s available for them there. Whatever the scholarship amounts ($500 to 5K), it all helps with paying off the cost of college.
Applying for federal student aid is a reality both parents and students have to face. The now electronic FAFSA form is quick and easy to complete and includes the ability to collect financial information from the IRS so you don’t have to dig through tax records yourself. Though there were some problems with the form earlier this year, things seem to be smoothed out now. The Expected Family Contribution (EFC) Calculator can help you estimate your eligibility for federal financial aid. Check it once a year so you know how much you’ll need to contribute.
#5 Health care coverage and necessary funds
Health care is expensive and accidents or injuries do happen, so make sure your child has adequate insurance coverage. If your child is insured under your policy, will your policy fully cover them when living out of state (including overseas, if your child is studying abroad)? Additional insurance to supplement your own policy may be required.
You should also set them up with quick and easy access to money they’ll need for things you’ve agreed to pay for like groceries and gas as well as unexpected needs like car repairs and doctor visits/medicines. This can be a shared bank account (to which you can easily deposit funds), access to a credit card, or a plan for regular deposits to your child’s account.
There are plenty more things that could be added to this list, but these are my top places to start.
Next week, I want to talk more about a huge preparation task for Shasta County parents: saving money for college (so you don’t have to accept so much federal student aid). Specifically, I’ll discuss 529s (College Savings Plans) and other tax-advantaged ways to save. After all, you’re putting a lot of money into your child’s future, so if you can save yourself some with the IRS, then let’s get that done:
Preparing you for every situation,
Dennis Fritz
