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529 Plans Rethinking the Possibilities

529 Plans: Rethinking the Possibilities

529 plans are no longer solely reserved for college tuition. Today, these versatile accounts offer a broader spectrum of possibilities beyond saving for college, covering expenses like vocational schools and K-12 education. With their tax advantages and adaptability to diverse educational paths, 529 plans emerge as a strategic solution for families seeking flexibility and foresight in securing their children’s educational future. In this blog, we are rethinking the possibilities of 529 plans to explore their full potential and delving into how you can leverage these accounts to invest in your child’s future at every stage of their education journey.

529 Plans for College Tuition

Traditionally, 529 plans have been used to save for college tuition and related expenses. These accounts offer tax-deferred growth and tax-free withdrawals when funds are used for qualified higher education expenses. By contributing to a 529 plan, parents can build a dedicated fund to cover the cost of tuition, room and board, books, and other college-related expenses. Anyone can contribute to 529 plans, allowing family and friends to contribute to your child’s future education.

K-12 Tuition

In recent years, the scope of 529 plans has expanded to include K-12 education expenses. Families can now use a 529 plan to pay for up to $10,000 in tuition at elementary, middle, and high schools, including private and religious institutions. This flexibility allows parents to start saving for their child’s education from an early age and provides additional options for educational choices beyond the traditional public school system. 

Vocational Schools

Another exciting development in the possibilities of 529 plans is the ability to use funds for vocational schools and career training programs. If your child is interested in pursuing a trade or obtaining specialized certifications, a 529 plan can help cover the cost of tuition, fees, and supplies. This opens up new opportunities for students who may not have considered traditional four-year college programs, allowing them to pursue career paths aligned with their interests and goals. Eligible vocational schools, including many technical colleges, cosmetology schools, culinary schools, and more can be found using the Federal School Code Lookup Tool.

Apprenticeship Programs

529 plans can also be used to support apprenticeship programs that are certified and registered with the U.S. Department of Labor’s National Apprenticeships Act, providing financial assistance for on-the-job training and educational coursework. Apprenticeships offer a valuable alternative to traditional education pathways, allowing individuals to earn, while they learn and gain practical skills in a specific trade or industry. By using funds from a 529 plan, apprentices can offset the cost of program fees, books, supplies, equipment, and other related expenses, making these opportunities more accessible to aspiring professionals. The Department of Labor provides a search tool to determine whether your apprenticeship is eligible for 529 plan funds. 

As 529 Day approaches, it’s time to rethink the possibilities of 529 plans and explore the various ways you can use them to invest in your child’s education journey. Contact the Blakely Financial office today to learn how we can help you maximize the benefits of 529 plans and support your child’s goals every step of the way. 

 

The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Investing in Your Graduate’s Future: Planting Seeds for Long-Term Success

Investing in Your Graduate’s Future: Planting Seeds for Long-Term Success

Graduation is right around the corner! It’s an exciting time to celebrate your child’s accomplishments and look ahead to their future. As a parent, you play a crucial role in setting them up for success, and one of the best ways to do so is by investing in their future. There are countless ways to sow the seeds for long-term financial security and prosperity. In this blog, we are delving into ways you can invest in your graduate’s future journey today, so they can watch the returns flourish in years to come.

Roth IRA Contributions

Consider starting a Roth IRA for your child if they’ve earned income. A Roth IRA offers tax-free growth and withdrawals in retirement, providing a valuable tool for building financial security over the long term. By making contributions to a Roth IRA early on in your child’s life, you can leverage the power of compounding growth and set them on the path to a comfortable retirement. While Roth IRAs can also be used for educational expenses, in order to withdraw money without being charged taxes or penalties, you must be over 59 ½ years old and the account must be at least five years old.

529 College Savings Plan

Investing in a 529 college savings plan is an excellent option to support your child’s educational goals. These plans offer tax-free growth and withdrawals for qualified education expenses, making them a tax-efficient way to save for college. Parents are not the only people eligible to contribute, allowing family and friends to give a lasting gift to the beneficiary’s future. 

Whether your child plans to attend a traditional four-year college or university or pursue vocational training, a 529 plan can help ease the financial burden of higher education and provide valuable opportunities for their future. If your child receives a scholarship or decides against further eligible education, 529 savings plans offer the flexibility to change the beneficiary to avoid paying taxes and fees on unused savings.

Custodial Accounts (UTMA/UGMA)

Opening a custodial account, such as a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA), allows you to invest in stocks, bonds, or mutual funds on behalf of your child. These accounts are a great investment option because they offer flexibility and control, allowing you to manage the assets until your child reaches adulthood (at 18 or 21, depending on the state). Introducing your child to the world of investing early on can help them develop valuable financial literacy skills and set them up for financial success in the years to come. 

Additionally, the funds can be used for the minor’s benefit before they take control of the account, including to help pay for college! Earnings are taxed at the minor’s tax rate, subject to kiddie tax rules. Before pursuing custodial accounts, talk to a financial professional to confirm which tax rules apply and how to best manage the funds. 

Financial Literacy Education

Investing in your child’s financial education is perhaps one of the most valuable investments you can make. Providing access to resources and courses on financial literacy from a young age can equip your child with the knowledge and skills necessary to manage and grow their finances effectively. From budgeting and saving to investing and retirement planning, a strong foundation in financial literacy sets the stage for a lifetime of financial success. 

As graduation season approaches, now is the perfect time to start investing in your graduate’s future. Regardless of the investment options you choose, every investment you make lays the groundwork for their long-term success. By contributing to your child’s journey to financial literacy and prosperity today, you can help create a bright and prosperous future for your graduate tomorrow. If you need assistance getting started, contact Blakely Financial today. Our team is here to help you discover the best investment options and work towards a secure financial future for you and your family. 

The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Managing Finances in a Blended Family

Managing Finances in a Blended Family

Embarking on the journey of blended families brings both joy and unique challenges. Navigating the intricacies of a blended family requires careful consideration and planning, especially when it comes to managing finances. No matter your age or stage in life, open communication, and proactive financial strategies are essential for building a strong foundation for your new family’s future finances. In this blog, we’ll explore key considerations for managing finances in a blended family to set the stage for a prosperous and harmonious financial future. 

Blended Family Basics

When entering into a blended family, there are some key items to consider to help navigate potential challenges. Above all, clear communication is paramount.

Clear communication is not only about how you’ll blend your children if you have kids in your marriage but also about how you will manage your finances in this new blended situation. It is important to ensure your wishes are clear to both families within a blended family so they are played out properly in the long run. Having clear communication across a variety of different areas within your life will make the financial planning process as seamless as possible. 

Blended Family Estate Planning

Managing estate planning in blended families can present unique challenges. When entering into a blended family, it is critical to sit down with your new spouse to discuss several important topics, including estate planning. Estate planning is important and can be challenging for everyone, but there can be some additional difficulties and hurdles when it comes to entering a blended family. 

You need to have an honest conversation regarding what would happen if something were to happen to you. This does not only include death. If one of you were to get sick, who is going to make medical decisions for you? Who is going to be able to cash your checks, manage your investment accounts with your advisor, and have that financial power of attorney? In the instance that you were to pass away, it is important to consider where you want your assets divided. Will they go to your new spouse, prior children, or somewhere else? 

While these conversations may be difficult, they are necessary to have with your new spouse when entering a blended family. If you need help getting started with these, reach out to your financial advisor. They will have resources available to help guide you through the estate planning process.  

Merge or Keep Separate?

Again, upfront conversations with your new spouse may be uncomfortable but are necessary so you are on the same page heading for a successful future. Your finances should be part of these conversations, particularly whether you will keep your finances separate or merge them. We’ve seen success both ways, the decision really depends on how you both want to work. 

If you do opt for separate accounts, you will want to be sure to have beneficiary designations on those accounts, have payable on death on your bank accounts, and any other necessary precautions in place so that if something were to happen to one of you, the other would still have access to important accounts. One common approach is to have one house account where you both contribute money to cover joint bills, but then keep your separate accounts for your own mad money. Regardless of what this decision will look like for you, clear communication is key to finding a balance that works for both partners. 

Finding Your Unique Advisor

When entering into a blended family situation, no matter what your age is, you must find a financial advisor who caters to your unique needs. If you’re further along in your career, you may already have established financial habits long before you entered into this new marriage, making it even more important to find an advisor who can work with you to help you reach your unique goals in the long term. 

Blakely Financial’s own Emily Promise is a Certified Divorce Financial Analyst, CDFA®, Institute for Divorce Financial Analysts. With her experience, she can help guide you and your blended family toward a bright financial future together. Contact us today to get started.

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

2024 Financial Planning Tips & Updates

At the start of a new year, it is critical to reevaluate your financial status and strategies as well as consider the changes in rules and regulations that may impact your financial well-being. In this blog, we’re sharing information and updates to help you navigate your 2024 financial planning. 

Changes in Contribution Limits

The new year is the perfect time to review your employer benefits to make sure you are taking full advantage of everything offered to save for retirement. It is also crucial to review and understand any changes to contribution limits for the year. The following are changes for 2024 and should be factored into your 2024 financial planning:

  • The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, increased to $23,000, up from $22,500.
  • The limit on annual contributions to an IRA increased to $7,000, up from $6,500. 
  • The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, remains $7,500 for 2024.
  • There were also increases for SIMPLE and SEP contributions.

Social Security

In 2024, Social Security recipients will see their monthly payments rise by 3.2 percent. The maximum amount of earnings subject to the Social Security tax will increase to $168,600. The earnings limit for workers younger than full retirement age will increase to $22,320 and the earnings limit for people reaching their full retirement age will increase to $59,520. 

Financial Planning as a Family Affair

Our concerns often extend beyond our immediate financial well-being to that of our family. Instilling financial responsibility and planning in our children to ensure they have a solid financial foundation is invaluable. Are your adult children entering the workforce and beginning to build their careers? If so, are they planning for their financial future? Encouraging your children to focus on financial planning is critical in promoting their financial security. A conversation with a financial advisor can help equip them with the knowledge necessary to make informed financial decisions to align with their objectives. 

Additionally, it is essential to review your estate documents with your most current financial situation and goals in mind. Many things can change over the course of a year. Sit down with your financial advisor and review documents including wills, trusts, and beneficiaries. Do they still align with your current needs, wants, and wishes? If not, update your documents to prevent future complications and ensure a secure financial future and financial legacy for you and your family. 

The Blakely Financial team is here to guide you through the financial planning process. Contact us today to get started. Together we can begin paving your path to a financially prosperous year. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Securing Your Future: Tips for a Successful College Planning Journey

Securing Your Future: Tips for a Successful College Planning Journey

Education expenses represent a significant financial commitment that accompanies us throughout our lives. Whether you’re considering having children in the future or you have teens nearing college age, we are here to equip you with essential knowledge and guidance for success in education planning.

Plan Based on Career Development

Work with your children to create a plan based on career development. When it comes to selecting a college, it is crucial to consider schools with programs and styles that align with future goals and aspirations. While small details are important, keep your eyes on the big picture: future success! Research the schools your children are considering and be sure to explore the degree programs each school offers to ensure they are properly equipped to help develop the skills and knowledge needed. The right college can make all the difference! 

Private vs Public Universities

When selecting a school, it is important to understand the details of the school and program. Each college or university offers a different price level dependent on many factors including program length, region/state, and type of educational institution. 

One of the most significant differences will be whether the school is public or private. Public colleges are mainly government-funded. They tend to have a wider selection of programs, more research opportunities, and a larger student body. Private colleges rely heavily on tuition, fees, donations, and endowments for funding and can be either for-profit or non-profit organizations. They often have more money available for grants and scholarships in addition to federal financial aid. 

The following are the estimated average costs of a full year of college at private and public colleges (via LendingTree):

  • Community college (public, in-state): $4,864
  • Community college (public, out-of-state): $8,622
  • Private community college: $15,460
  • Public two-year (in-district): $17,580
  • Public four-year (in-state): $25,290
  • Public four-year (out-of-state): $40,940
  • Private four-year: $50,900

College Savings Plan

A college savings plan is a crucial piece of the college planning puzzle and the foundation of any successful college financing plan. Think of your savings as a down payment on the total cost of college, similar to a down payment on a large purchase like a car or a home. 

Only 33% of families use a college savings plan to save for their child’s education. Whether you’re a new parent or already have children nearing their college years, it’s never too early or late to start saving to give them the best opportunities for success. Setting aside money over a long period of time takes discipline and even sacrifice, but can yield surprisingly positive results when done regularly. Work with a trusted financial advisor to help you navigate the process and create a plan tailored to your own goals and budget.

Financial Aid

Financial aid is a broad term for money used to help pay for college. It can include loans, grants, scholarships, and work-study funds. Ideally, you want to get the most from grants and scholarships to therefore have the least amount of loans possible. 

Colleges are the largest source of grant aid, with annual awards based on both need and merit. The federal government has two central grants, the Pell Grant, and the Supplemental Educational Opportunity Grant, which are reserved for those with high financial need. The federal government’s main contribution to financial aid is student loans, both Direct Subsidized and Direct Unsubsidized, which are available to all students regardless of their financial needs. 

Many colleges will have a net price calculator available on their website which can be used to estimate how much grant aid a student will receive from the school based on their financial and academic information. Use this to compare your estimated out-of-pocket cost at several schools and factor affordability into your college planning decisions. 

College is a significant investment, and understanding the financial aspects from college funding to school selection is crucial. The Blakely Financial team is here to help. Contact us today to get your college planning journey started.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Family Financial Wellness

Family Financial Wellness

Family Financial Wellness

Presented by Robert Blakely, CFP®

Summer is almost here! Children will be out of school, and that means more time together as a family. What will you spend your time doing? Do you already speak to your children about financial matters? Perhaps this summer, as a family, you can focus on your family’s financial wellness.

What is family financial wellness? Simply put, it is how you and your family, together, prepare for the future. 

Managing your finances can be stressful and take time. If you are not proactive and do not put a plan in place, your physical and mental health can be affected; you can lose sleep and lose focus. So it is imperative for a healthy family and your peace of mind that you follow some simple steps to ensure financial wellness for all. 

There are four components to becoming financially well as a family: savings, expenses, debt, and risk protection. These can be crucial to your family’s financial wellness and improving in each area should be a priority for you and your family. The following are some simple steps that can help as you start down the path of family financial wellness.

To begin:

Spend less than you earn.

Begin by creating a budget. Keep track of every dollar that comes in and every dollar that goes out. This will allow you to see where you are spending your money and where you might be able to cut back.

Set up an emergency fund.

Relatively small expenses can be devastating if you do not plan for them. Set up an automatic transfer each month and put a portion of each check into this emergency fund. Then make a promise to yourself and your family that you won’t spend it unless it is in a true emergency.

Pay down your debt.

List all of your debt, including the monthly minimum payments and interest rates. Decide which you will pay off first and commit to that. Just do it!

Protect your family.

Purchase life insurance which will give you peace of mind knowing your family is taken care of should the worst happen. 

Save for retirement.

The best way to do this is to participate in your employer’s offered retirement plan. Many employers offer a match, so make sure you contribute to the plan so you can get this ‘free money’ and maximum benefit. If your employer does not offer any type of plan, make sure to contact a financial advisor to set up an automatic transfer into a retirement account.

 

Taking these simple steps – and working together as a family – will help promote a healthy relationship with money for your children but also put you on the path to financial wellness as a family!

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other expert advice we can provide towards your financial well-being.

ROBERT BLAKELY, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Lane, Suite 109, High Point, NC 27262. He is the founder and president of Blakely Financial, Inc.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency or Blakely Financial, Inc.