Ouachita Stories

Chris Brune, Ph.D., CFP® is a professor of finance in the Hickingbotham School of Business, where he also serves as chair of the Department of Accounting and Finance and sponsors the Ary Student Investment Fund, managing millions of the university’s endowment. We recently sat down with Dr. Brune to hear his thoughts on questions that parents are asking — and what questions they should be asking about financial planning for college.

While you’re here, learn more about Ouachita scholarships or download a free budget worksheet provided by Dr. Brune.

Part 1 | Part 2 

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It’s tempting to start saving first and figure out a plan later. Dr. Brune makes the case for doing it the other way around. Here’s the first in a series on planning and paying for college.

Q: When a family decides they want to save for college, where should they start?
A: Most people want to start by opening an account and choosing an investment. But it helps to first consider what you’re trying to accomplish. What is it that you want your child to get from their education? What type of school is the best fit? How do you plan to finance the cost? What budgetary limits on debt or savings do you face?

When you go to the doctor, you don’t just walk in and expect a prescription. The doctor will want to know your symptoms and any other relevant information. College planning is the same. The “where” and “how much” should come after the “why.” Getting the sequencing right can help ensure that you come up with a realistic plan and the motivation to stick with it.

THREE QUESTIONS TO ASK FIRST
What kind of education do you want to make possible, and do you want to fund all of it or part of it?
Do you expect your student to contribute through work, scholarships or loans?
Where does college fit with your other goals, like retirement, giving or paying down debt?

Q: Should a family save for retirement or college first?
A: For most people, saving for retirement is a greater priority. That may sound like putting yourself ahead of your child, but that’s not the point. It’s about how the two goals behave over time.

Once you stop working, the time to save for retirement has passed. College funding offers more flexibility. If college savings fall short, a student might work, earn scholarships or go to a less expensive school. They might take on a manageable amount of debt with a feasible plan for repayment. There are simply more ways to cover the cost of education than there are to generate additional retirement income once the time for funding arrives.

WHAT “FUND RETIREMENT FIRST” REALLY MEANS
It doesn’t mean ignoring college until retirement is completely handled. It means keeping retirement savings moving — especially anything with an employer match — before college savings, so you don't trade a problem your student can help solve for one only you can.

Q: What if two parents don’t agree on how to prioritize all this?
A: That happens, even with couples who both value a college education for their children. Stewarding your finances often comes down to priorities, and when parents enter the conversation with different perspectives, there can naturally be some disagreement. When that happens, there’s no substitute for honest conversation. One thing that can be helpful is to go back to your objectives for your child in getting an education. If you can find agreement there, the rest of the details may be easier to work through.

Q: As a Christian, how do you think about giving alongside saving?
A: When you stop and think about it, there are only so many things you can do with money. But at some point in our lives, we all struggle with balancing how much to give, save and spend. Unfortunately, there’s not a single formula that works for everyone. Some financial planners suggest giving (tithing) 10%, saving (at least) 10%, and living off of 80%. But that’s still a generic rule of thumb that obviously doesn’t apply to every situation. The main point is to intentionally wrestle with the question.

And don’t forget to pray about it. It’s amazing how little time we spend in prayer for wisdom in how we steward our resources. We pray for guidance in other areas of our lives without hesitation. But when is the last time you prayed for wisdom in stewarding what God has entrusted to you? Start with prayer, then consider your goal and your budget, and take it from there. The smaller details are always easier to nail down once you know the general direction.

Next in this series: a plain-English guide to types of accounts — 529s, Coverdells, custodial accounts and how to tell which one fits your family.

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• College Planning