As graduation season comes to a close and high school seniors prepare to step onto college campuses this coming fall, Signal’s COO Alec Patrick and Digital Content Marketing Specialist Dorian Young spill the tea on all things college finances in this segment of Signal Sips.
Watch the entire interview here or read the transcript below.
DY: So, Alec, are you more of a tea person, or a coffee drinker, or do you prefer them at different times of the day?
AP: I would say I like a little bit of both. You know, late in the evening, you don’t want to be filling yourself up with caffeine, so I’ll shift to tea. [In the afternoon], I’m open to either. But since we’re spilling tea, I figured we’d sip tea.
DY: What’s your favorite kind of tea to drink?
AP: I’ve actually started getting into the herbal teas now.
DY: I’m a chai person, myself.
DY: I know right off the bat that you have a few kids yourself, so I’m just curious if you’ve started implementing any savings solutions to start saving for their higher education, college, anything like that and what approach you’ve taken?
AP: Sure. I have five kids. We have number six on the way, so we have a lot. I think one of the things that’s been helpful is being able to separate kids accounts into their own. So, we have our own accounts for each of the kids. That’s one of the awesome things now [about] our new online banking platform, you can see all of your different accounts underneath of your main account. So you can see any account that you’re linked on. It’s been really helpful to help you divide into that.
Also looking at different investment strategies, not only just putting money in an account and holding it, but I’m a bitcoin person, so we’ve actually put some money into bitcoin. You know, the CD rates now are also amazing. So, we’re trying to leverage some of the CD rates and the higher interest rate solutions that we have. Taking advantage of the rates when we have them and when they’re not there, maybe looking at other options. That’s the way we handle it. I’m sure there are better ways, but that’s how we’re doing it right now.
DY: Yeah, I know a big thing when I was kid was savings bonds. Is that still a thing that’s happening?
AP: Not for me as much. I know my grandparents got those for me a lot when I was younger, but I haven’t gotten too much into the savings bonds. But, you know, that’s maybe another option.
DY: And so, based on your personal experience so far, what advice would you give to families who are looking to start implementing those solutions or even students who are getting ready for college in a year or two years, however long, who want to actively be involved in that?
AP: For me, one of the things here at Signal, at least, that we’ve been able to take advantage of is our financial counseling that we have through AFS. So that’s been a way where you can get an idea of where you are financially and then start figuring out the best way to start allocating your funds. You don’t always want to just throw money into savings. There’s you know, different things you need to save for. You need emergency savings. [So], sometimes it’s better to let the professionals to do that side of it.
So that’s one of the things I would recommend for folks, is just to leverage what they maybe have at work. They may have financial counseling at their workplaces, use that, and see what they recommend. That’s a big piece of it.
Also, Maryland has programs through the state. Maryland has a 529 program for investing in, you know, college where you can get tax breaks and tax benefits. That’s another area where people can leverage and really look at some of the programs and things they have with the 529 plan. But again, you really want to have a financial professional kind of guide when you should be leveraging that program, when you maybe should be saving for [emergencies], and fitting it in based on your story, your life journey–what’s going on in your life, what can you afford, what do you need to focus on and priorities, right?
DY: How early would you suggest that families or individuals start saving for college?
AP: Definitely as early as possible. College is expensive, as I’m sure you know. I still am paying some college loans myself. So, you know, it can be expensive, and you get into these long payment payback programs, you know, where you’re paying off your loan for a while. So, there’s definitely no better time to start than now. You need to get into it, I think, as early as possible.
But also, like we were talking about earlier, really making sure that it fits within where you are with your financial goals and just your finances in general. There are important things that you need to make sure you have money for. You know, you may have an emergency situation. So, sometimes those emergency funds are just as important as saving for that college education.
I also think it’s important even early on to start getting advice and financial advice from professionals, and just see how they can help leverage things like the 401k that you have and the different options that you may have from your employer, and make sure that you’re starting as early as makes sense for you.
DY: What are some common mistakes that you found among people either in your life or outside of it that they make when they’re saving for college? Is it not starting early enough or misjudging how much debt they think they’re going to be in, anything like that?
AP: I think not starting at all is probably the biggest mistake. You have to start somewhere. You have to start at some point. So, I think just avoiding it or, you know, if you have plans for college, putting something in place to start that process. I think really the biggest thing to avoid is just not planning, not starting.
So, I would say start as early as possible. And like we talked about, get some help. If you’re not an expert in finances, get somebody to help you out and guide you on what you can and can’t afford, and where you should really be putting your money, and make that part of your plan and your program. I think it’s really important to have a plan and have a program, and make sure this is incorporated into it if that’s part of what’s going on in your finances.
DY: I know we talked earlier about making sure you have savings for an emergency as well as allocating funds towards college. But do you have any certain approach that you would recommend for balancing other financial goals?
Say you have your emergency fund, your college funds, and then you also have rent to pay or you’re paying off a car payment, or student loans like you said you still have. Do you have any approach for that?
AP: Sure. I think there’re a lot of financial tools that are available and I think they can really assist in helping you plan for these things. I mean, even with [Signal’s] online banking program, there’re budgeting tools in there, as well as financial goals in there where you can set a goal and start saving for a vacation or college. Those are different options.
I’ve actually started using an app called YNAB. It’s just a budgeting app, where it’s a similar thing, where you set the goals, you identify the things that you want to save for, and start setting aside money for that so that you know where every dollar is going. You know where your money’s going, and then you can plan in appropriately.
You know, in my past—and we talk about mistakes that you make—sometimes flying by the seat of your pants is not the best way. And I have done that in the past. I think it’s better to start to get that organized and make sure you know where your money is. That way you find areas of opportunity to cut. Maybe you’re going to Starbucks, every day, right? You can replace that with tea or find different areas where you can leverage your budget a little better or trim things.
I also found that you have these monthly [subscriptions] that you’re paying for, like Netflix. And sometimes you may not need that, or you may just be paying it because it’s coming through on a monthly basis. But when you really sit down and evaluate your finances, maybe you don’t necessarily need that. You can get away with it for a couple of months and take that money aside and start putting it towards college or [other] things.
That’s where I think the prioritization comes in. Really identify what’s important and what makes sense, and a budgeting app like [YNAB] really helps you understand exactly where your money’s going.
DY: Do you have any tips on how parents can involve their kids in the college saving process? Have you done anything with your children to help get them involved at this early stage? I know they’re all relatively young, right? So maybe not yet.
AP: Hopefully in the future. I do have a 16-year-old, so we’ve tried to get her involved a bit and I think some of that is helping them get their own account and getting them set up [financially]. We have some minor accounts, you know, at Signal, for instance, where you can get your child set up and then they have their own account that you’re joint on. You can use that to give them a debit card and maybe [put their] allowance in there and have them actually start using an app and just seeing some of the tools that are available for them and getting familiar with it. So that when they’re coming out of college or coming out of high school, it’s not the first time they’re seeing these things. I think that’s one area [where] you can get your kids involved.
But I really think giving them a debit card early, and I’ve seen even with our 16-year-old, when we first gave her a debit card, she didn’t even know how to use it. Then it’s like, you give her the card [and] there’s even a level of intimidation to purchase something because you don’t even know how to, you know, swipe the card.
So, I think little things like that where you burn down these barriers, [which] they may be small, but not knowing how to use a debit card can [become a much] larger [issue] if you don’t address it. I think allowing them to use these tools early will get them comfortable with it, and then it won’t be such a burden when they get to the point where it’s a requirement.
DY: So lastly, what advice would you give someone who feels like they’re falling behind on their college savings?
AP: That’s always a tough situation when you’re falling behind. A lot of times, you know, money is not flowing, so you’re needing to really deal with every little bit that you can. I think that’s where the planning that we talked about earlier is very important. And budgeting.
Even I recently have kind of shifted from [unstructured] budgeting to being more formal. And I think doing that is very helpful. You can plan a lot better. And then I think a big part of that is cutting out those [extra] pieces. So, in some cases you may not need to go out for food as much, or you may need to buy groceries and cook, or make changes to your lifestyle in some fashion. And I think a lot of times that planning and budgeting can be helpful in doing that.
Also, we mentioned the Maryland 529 program earlier. They actually have programs there as well where you can get a small amount added to your plan. So, there’s maybe little awards and gifts that can be looked for, reaching out to family and friends—maybe not friends. But, you know, you may have a grandparent and just letting them know that college is an important thing, and they can sometimes assist and help you out, or come up with a payment-type plan to help you out with things.
I think those are all different ways to kind of get into it. If you find yourself in a situation where it’s hard to meet the budget that you’re coming up with, there’re definitely avenues out there available and just looking for those opportunities and trying to take them as they come.
DY: Yeah, for people who want to ask family members for help or anything, but they might feel a certain anxiety about that, do you have any recommendations on how they could approach it? Or, if you have family who’s going to help you financially, that’s a great support system in and of itself, but I think a lot of people feel embarrassed to ask. Especially people my age, who maybe just graduated college and are in debt, or are in college currently and might be running out of their funds that they set aside for tuition. I think it’s important to give some advice on what approach they might be sure or how they could go about doing that.
AP: I mean, I’ll do my best there. That’s a tough one as well. But I think one of the biggest parts of that is by not asking, you’re always going to get a no, right? If you don’t ask, the answer will always be no if you don’t at least speak up. I think just even understanding that and knowing that you’re not going to get anything unless you ask is a big part of that.
I don’t ever think it’s a bad thing to ask. The worst that can happen is they’ll say no. Yin a safe space with family, so if there’s anybody who you’re going to be willing to ask, it’s going to be your family. I would [also] say that’s a good opportunity to challenge yourself from a negotiation perspective and influence perspective, and just ask the question. You may be surprised sometimes as to what you find out. Sometimes you’ll get yeses when you expect nos, and sometimes you’ll get nos when you expect yeses. But you’re always going to get a no if you don’t ask.
