Are you wondering how to account for educational expenses in your plan?
There are a wide variety of ways to fund college expenses for dependents as well as ourselves and other individuals. In this article we'll discuss the most common account types as well as methods to account for educational expense planning in the Planner.
Add Accounts
If you have specific funds saved for Educational purposes, we recommend including those in My Plan > Accounts and Assets
529 Accounts
A 529 account is a savings account offered by state agencies, or educational institutions with the purpose of funding educational expenses of a beneficiary (which could even be you). 529 accounts are a great option for educational savings as well as gifting to minors because they offer tax free growth and tax free distributions when used for qualified educational expenses. And, depending on your state, you may also be able to take a state tax deduction on your contributions.
After - Tax Accounts
Many individuals will not have the entire cost of education saved in a 529 plan and may rely on additional savings from after-tax accounts. You have the ability to add checking, savings and brokerage accounts to your plan.
Add Expenses
If you would like educational expenses included with your general recurring expenses, you may enter them in your Basic or Detailed Budgeter/
Add Disbursements
Navigate to My Plan > Expenses and Healthcare > Disbursements to account for educational funding if you wish to select specific accounts. This will allow you to select the particular accounts, amounts, and dates or time frames.
If you do this you should exclude any costs covered by the Disbursements from the recurring expenses so that you don't overstate the expenses.
If an account does not have sufficient funds to cover the expense, the expense will remain unfunded - the Planner will not move on to a subsequent account to fund the expenses. At that point unfunded expenses would be modeled by additional disbursements from other accounts or include the rest of the educational expenses in your recurring expenses.