Your monthly cash flow, or income, is what drives your budget and gives you the ability to pay your bills. There are two general types of income: income from working (earned income) and income from investments (unearned income). An increase in either one can increase your expected family contribution and decrease your financial aid eligibility. However, don't let the financial aid "tail" wag the income "dog." Make as much money as you can!

Make more money

If you have the opportunity to make more money by working some overtime, earning a bonus or getting a bigger commission check from a few extra sales, then go for it. Some parents take on a second job or consulting work to make a little extra to help with private school and college costs, while some stay-at-home parents who have been caring for the children who are now in school or college will actually go back to work part-time or full-time. These are all examples of you at work. Now let's talk about how to put your money to work to enhance your cash flow

Use your investments to generate cash flow

Unearned income includes the dividends, interest and capital gains that come from savings and investment products like stock, mutual funds, bonds, CDs and savings accounts. This income can be reinvested back into the account to help it grow, or you may choose to have it paid out to you. Instead of reinvesting this unearned income, you can take it out of the account (aka: taking the growth off) and use it to help fund education costs, make payments on loans or whatever is most advantageous in your specific situation.

For example, a $50,000 bond with a *7% yield will generate $3,500 in interest each year, which could be used to help pay education costs directly instead of taking a $3,500 Stafford Loan. Or you could use the cash flow to make the payments on a loan if you need to take one.

Re-direct contributions to savings and retirement accounts

Let's say that you have been saving money for your son to attend an independent high school. When the time comes to start paying for that school you could choose to stop making contributions to the investment account and re-direct those contributions and use the money to pay for tuition instead. Likewise, you could reduce, or pause, contributions to your 401k retirement plan instead of taking a loan from your 401k. The nice thing about this tactic is that you can make changes anytime you like.
 

* The rate of return is hypothetical only, and does not represent any particular investment.  Actual results will vary.
All investments entail risk, including the risk of some or all of an investment.  Investments do not provide a guarantee against loss.  INDY College Funding does not offer investment products or advice.  Before choosing any investment, seek the advice of a financial adviser.