Money Management Skills



% There is no ability to save on state income taxes with a Coverdell,

so the only tax advantage is avoidance of federal taxes on any

LQYHVWPHQW HDUQLQJV ZLWKLQ WKH DFFRXQW %HFDXVH WKH PDLQ

advantage of Coverdell accounts is for precollege education, and

the only tax advantage is sheltering from investment taxes over

time, these make sense for parents who are saving early for private

VFKRROV%XW&RYHUGHOODFFRXQWVFDQDOVREHXVHGIRUFROOHJH

% $W\SHRILQGLYLGXDOUHWLUHPHQWDFFRXQWNQRZQDVD5RWK,5$FDQ

DOVREHXVHGDVDFROOHJHVDYLQJVWRRO,W¶VNLQGRIOLNHDEXW

\RXFDQXVHWKHIXQGVIRUHLWKHUDFROOHJHHGXFDWLRQD¿UVWWLPH

KRPHSXUFKDVHXSWRGROODUVRUUHWLUHPHQW%XWWKHHDUQLQJV

DUHWD[HGXQOLNHDDQGLI\RXXVH5RWKPRQH\IRUFROOHJH\RX

MXVWDYRLGWKHSHUFHQWSHQDOW\IURPHDUO\ZLWKGUDZDOV,W¶VQRWD

JUHDWRSWLRQEHFDXVH\RX¶UHJLYLQJXSDYHU\DWWUDFWLYHUHWLUHPHQW

VDYLQJVWRRODQGVWXGHQWVPD\EHEHWWHURIIMXVWERUURZLQJPRQH\

Federal Student Loans
% The federal government provides loans to students, but your ability
WRREWDLQVRPHRIWKHVHORDQVLVGHWHUPLQHGE\WKH)UHH$SSOLFDWLRQ
IRU )HGHUDO 6WXGHQW $LG )$)6$  )$)6$ DOVR GHWHUPLQHV
eligibility for grants such as Pell grants, but these are primarily for
very low-income students whose parents may not have enough to
KHOSRXWZLWKFROOHJHH[SHQVHV7KHLQVWLWXWLRQPLJKWDOVRSURYLGH
JUDQWVWRGHIUD\FRVWV&ROOHJHVKDYHWKHLURZQGHDGOLQHVIRU¿OOLQJ
RXWWKH)$)6$

% 7KH)$)6$UHTXLUHVWD[UHWXUQLQFRPHLQIRUPDWLRQIURPSDUHQWV

and students, along with information on assets outside of retirement

DFFRXQWV7KHUHLVVRPHVWUDWHJ\WRPD[LPL]LQJORDQHOLJLELOLW\

so it might be worth seeing an adviser or consultant to maximize

¿QDQFLDODLG

% 2QHRIWKHGLVDGYDQWDJHVRIDLVWKDWZKHQLWLVSXOOHGIURPDQ

account that is owned by someone other than a parent, this counts

DVVWXGHQWLQFRPHIRU)$)6$SXUSRVHV,QRWKHUZRUGVWKHEHQH¿WV