Going back to school looks different right now, but goal setting hasn’t changed. Here’s what you need to know.
Everything about how we interact with the world seems to be in flux in 2020—and that includes back-to-school plans for the fall. Whether your child is in elementary school, high school, or college, there’s a lot of uncertainty about how things will look. However, that doesn’t mean that the way you set and manage your money goals should be different.
“How people go back to school might look different this year, but goal-setting hasn’t changed,” said Mark Gleason, senior manager, investment products and guidance for TD Ameritrade. “Even if the priorities are a little different, it’s still possible to set money goals and try to adjust to the current environment.”
Traditional school might not be what we see this fall, Gleason pointed out. Harvard announced that, even if students return to campus in some capacity, most teaching would be done online. Most universities are planning at least some level of distance learning. At the elementary, middle, and high school levels, school districts around the country are grappling with online instruction, staggered schedules, and how to maintain social distance if and when children return to the classroom.
“With kids staying home and extracurricular activities limited, this might be the time to rethink where some of your money is going,” Gleason said. “If you don’t have to buy new clothes, school supplies, or pay for extracurricular activities, you can direct some of that money to a 529 plan or other college savings plan.”
Gleason also pointed out that recent changes to 529 rules allow parents to use some of the money for K-12 expenses. Remote school might mean you need a computer for your child, or you might be able to sign your kid up for a qualified online academy and use some of the 529 money to pay those costs. Consider sitting down with a professional who can help you review your choices and can inform you if your state has any restrictions or tax implications regarding this new rule. They can also help you figure out how to make the most of your money while maintaining your child’s education.
Gleason also suggested rethinking the idea of a so-called “gap year” for college students. In the past, many parents disliked the idea of letting junior take a year off from studies. “When you miss a beat, you lose the rhythm,” or so the thinking went.
But the rhythm of 2020 is already quite syncopated, so if your student’s university isn’t allowing kids to come back to campus in the fall, letting them take a year off might not be a bad idea. Not only does it give them a chance to work and earn money, but it also gives parents a little extra time to beef up the college savings account. Another choice may be to look into online schooling for college students as some schools are offering tuition discounts for students who choose to learn online. In addition to the discount, parents don’t have to pay the extra expenses for an on campus experience.
“COVID-19 has made changes to what school looks like this coming fall, but it doesn’t change the need to save for tuition,” Gleason said. “It’s still important to set money aside right now if that’s something you can afford to do.”
Even with some of the changes to back to school in 2020, Gleason said it’s important to have a clear vision for your money. “Even though the landscape is different right now, it’s not an excuse to put off planning,” he explained.
Gleason suggested using SMART goals to move forward, including money goals for back to school and paying for college. SMART goals are:
You might have to adjust your timeline because of the novel coronavirus pandemic, but Gleason emphasized that the essence of goal-setting remains the same.
“Take a step back. Look at your situation and think about where you want to be,” Gleason said. “Start with a specific amount you want to save and the type of progress you want to make. Recognize that you might get extra time to meet your goals, or that changes in spending patterns might mean the ability to tweak your goal and beef up your savings.”
Gleason pointed out that TD Ameritrade has a goal-planning tool that can complement a goal-planning session with a financial consultant. Depending on your situation, it might make sense to talk with someone and create a road map that can help you reach your objectives.
Planning for college and saving for other back-to-school goals is important, but Gleason underscored the importance of not putting your retirement in jeopardy.
“Sometimes parents get carried away with all these opportunities, including paying for expensive sports or even raiding their retirement accounts to pay for a prestigious college,” Gleason said. “Don’t let all of this, including the adjustments you make for COVID-19, distract you from other long-term goals like retirement.”
There’s a lot going on in the world right now. Much of it is important and could impact your finances. But Gleason suggested looking at the situation and shoring up your retirement, as well as planning for other money goals.
“It’s possible to create a timeline that allows you to continue saving for retirement, even as you work toward other goals like college and back to school,” Gleason said. “Carefully consider your current situation and figure out a plan that works for you. Consider consulting a professional who can walk you through it with an outside perspective.”
There’s no way to predict what’s next. But by setting goals and sticking to them—and by being flexible when it’s called for—it’s possible to weather the storm and stay on track.