Questions to ask your banker heading into the new year

With another year wrapping up, many might now be thinking about small changes they can make to ensure 2017 is their best year yet. One often neglected goal concerns financial conundrums, whether they involve paying for college or saving for retirement. Fortunately, the financial professionals at your local Vectra Bank are there to help you navigate these daunting obstacles. Keep in mind some basics on long-term saving, and reach out to develop a plan of action.

Understanding college savings and loans

If you're younger than 30 years old, chances are you are still working to pay off debt accrued from your time earning a college degree. A report from the Institute for College Access and Success found that seven in 10 seniors graduating in 2015  did so under the weight of student loans, with outstanding balances averaging more than $30,000. For some, the amount owed could be significantly more.

The new year is as good a time as any to sit down with a financial professional and sort out your student loan situation. This is especially true because many students borrowers who graduated in the spring will only be just beginning to repay their loans if they used common grade period exceptions.

Whether you're still working to save for college or are focused on repaying loans now, take the time to familiarize yourself with the best saving and borrowing tactics:

• Saving for children: If possible, parents should work to save a chunk of money for their children's tuition. While this may sound daunting, it's much more realistic than many realize. The New York Times spoke with financial advisor Kevin McKinley about his simplified approach to college saving : Aim to save about 25 percent of estimated tuition costs before the child turns 18, then pay another 25 percent using income for the four years they are in school. The other half can be borrowed, substantially reducing the usual debt burden.
• Knowing what and where to save: College savings don't need to sit in a standard low-interest savings account. Many states offer 529 savings plans that earn higher returns and are tax deductible. Using these accounts, earning an average 5 percent interest, a family would need to save just $115 per month for 18 years to match 25 percent of the average tuition at a four-year state college.
• Borrow smart: If and when you need to take out loans for college, opt for federal loans first. These are limited to $25,000, but generally offer the best interest rates and repayment plans. Beyond that, parents could consider tapping into their home equity to finance tuition. Home equity loans or credit lines often come with relatively low rates as well.

Retirement accounts

The benefits of a retirement account are many, so there's little need to repeat them here. But another often ignored benefit of quality IRAs and 401(k) funds is their low-maintenance performance. With financial markets under the constant pressure of uncertainty and news headlines blaring whenever they succeed or fail, it can be hard to resist the urge to move retirement money around. However, a study from Fidelity Investments found that the best-performing accounts  were owned by people who had forgotten they even owned one. 

How could this seemingly counterintuitive fact be true? In a sense, it's a testament to the long-revered, "slow and steady" approach to long-term investing. By simply making good fund choices from the outset and contributing diligently, most retirement accounts will grow considerably with very little attention required. To learn more about which retirement accounts and investments work best for your goals and savings needs, speak to a financial professional at your local Vectra Bank branch.