A Parent's Guide to Open Conversations
Picture this: your teenager, brimming with excitement, is considering universities, each
with its own allure and price tag. Amidst the flurry of applications and acceptance letters,
it's time for the money talk.
As parents, we're wired to protect our children from life’s messy realities. Yet as our
kids approach the pivotal decision of where to attend college, it's crucial to have
candid conversations about the financial actualities hiding behind the glossy brochures and
campus tours.
Talking about finances with your kids is healthy—and necessary.
Firstly, let's debunk the myth that discussing finances with our children is taboo. In
fact, it's a critical step toward empowering them to make informed choices. Whether
it's outlining how much financial assistance you can provide or unraveling the maze of
scholarships and grants, transparency is key.
Consider this (real-life) cautionary tale of a former college student: Unaware at the
outset that the loans her parents took out for her college education were later to be
her responsibility, she spent a decade post-graduation shackled by debt. It's a
scenario no parent wishes for their child. Yet by shielding them from financial truths, we
may inadvertently set them up for a similar fate.
The best time to start talking about money with your kids is now.
Education is key, and it’s never too early to teach your kids about wise money management.
Even elementary-aged children can grasp simple financial principles like saving, and most
middle-schoolers can understand the basics of budgeting. Once they reach high school, you
can introduce concepts like compound interest and the implications of taking on student
loans.
If you haven’t had these conversations with your soon-to-be college student, make the time.
Most children who live at home don’t have a realistic grasp on the total cost of living, and
that’s something they’ll need to understand before they make one of the biggest financial
decisions of their life.
Start by illustrating the correlation between income, expenses (don’t forget the tax bill),
and savings. Then take it a step further by using real-life examples: help them consider
what their potential earnings could be in their desired field upon graduation, the cost of
living at or around different universities, and the tuition and fees for each. Factor in the
cost of transportation, car insurance, “fun money”—anything your child might need or want.
Then you’ll both have a better idea of how affordable different schools are, and whether or
not loans (and their subsequent interest) are the right choice for them.
By starting these conversations early, we set up our children for success in managing their
finances during college and beyond.
Your child’s college dreams shouldn’t supersede your future financial security.
Let's face it: we want the best for our children, often at the expense of our own
financial well-being. But herein lies the dilemma. Sacrificing our retirement savings to
fund their education may seem noble, but it's a decision fraught with long-term
repercussions. And considering the rising costs of long-term care, it's essential to
strike a balance between supporting our children's aspirations and safeguarding our own
financial future.
What most children truly desire, after all, is not just a college education but the
assurance that we as their parents will be financially secure in our later years. By
shedding light on the financial implications of their choices, we empower them to make
decisions aligned with both their career aspirations and our financial reality.
Give your child a financial gift that lasts a lifetime.
Ultimately, these discussions aren't just about dollars and cents; they're about
fostering a deeper understanding and appreciation for the value of money. By empowering our
children to make informed financial decisions, we're laying the foundation for their
future success and financial well-being.
So, to all the parents of soon-to-be college students out there, embrace the opportunity to
have open, honest conversations about college finances. Your children—and your retirement
savings—will thank you for it. After all, the greatest financial gift we can give our
children is that of financial literacy and independence.
If you’d like help navigating these discussions or preparing for your young child’s future,
we’d love to help. You can schedule a consultation with us here.
