Ask the Expert: Greg Wagoner

finance-expert

You’ve got the basics of food, clothing and shelter covered for your family, but what about financial
security? Do you have an emergency fund set up? How much should you be saving for college? Is it
necessary for kids to still know how to write a check? Here a local expert answers some of your money
questions.

Greg Wagoner, CFP, MBA, CLTC

Financial Advisor
Wagoner, Wagoner & Associates
5954 Renaissance Place, Suite D, Toledo 43623

1. How much money should I put away each month to fund college education?

I don’t think you can put a specific dollar amount on it. On average, tuition costs rise 8% annually, so it’s important to try and keep pace with it. However, that’s not always realistic for many people. I always tell clients that something is better than nothing; $25 a month will be worth it 18 years from now.

2. Are there different college funds that pertain to Ohio / Michigan and/or are there college funds that can be used at any college in any state?

Most states in the U.S. do have a specific state sponsored plan. The significance with the state sponsored plans is that you have to use the state’s plan that you live in to receive an annual state income tax credit. For example, in Michigan you can receive up to $10,000 a year state tax deduction per beneficiary per year. In Ohio, the state income tax deduction is $4,000 per year per beneficiary. The state specific plans have no effect on what state you can use the funds for school. You will be eligible to use the fund any state in the country.

3. What amount of money should we have set aside for an emergency fund?

This may vary from person to person. Our general thought is, if you have two income earners in your home, you should have three months’ worth of expenses as a cash reserve. If you have one income earner, you should have six months’ worth of expenses as a cash reserve.

4. If you had to choose just one, would you put money in a 401k or a savings account first?

If I had to choose one, I would choose a savings account. It is important to make sure you have a cash reserve on hand in case of an emergency, before worrying about retirement.

5. At what age should you be talking to kids about the value of $1?

It is important that kids understand the value of a dollar, but I’m not sure you can place an exact age on when to teach them. Kids are a lot smarter than they are given credit for and catch on to things at a very young age. I think when teaching any important lesson, it’s best to start young, and explain it in a way that they will understand.

6. Any tips for getting kids to save at a young age?

One rule I recently heard that I like a lot is to have your child put 50% of their birthday, Christmas, etc. money into a savings account, and keep the other 50% for their own personal use. That way, the process is ingrained in them early.

7. So much banking is digital anymore (think PayPal, Venmo and more). Is it important to make sure kids still know how to write checks and count change?

While technology is seemingly taking over banking (among other things), it’s still important to make sure kids know how to write checks and count change. Anything could happen that could result in technology not being right at our fingertips, yet we would still need to pay our bills.