It feels good to be back in the seat of my office and helping those around me achieve their financial goals and dreams. Maternity leave came and went too quickly but I am thankful that my son Rhys and I are happy and healthy. I thought I would share some of the financial topics that crossed my mind before and after Rhys was born.
The most important thing when starting a family is to have MANY conversations with your spouse, partner, self or significant other of the financial expectations for your child and what you do or do not want to provide them. Being on the same page can save you a lot of headaches when the time comes to implement the plan.
Once you are on the same page discuss what life you would like your little one to have. Is it them being debt free when they exit college or start working? Is it paying for an in-state school not ivy league? Do you want them to work while they are in school to pay for some of their own wants? Do you start a savings or college fund? The list goes on and on.
Being a new mom, I want to provide my son with everything and then some. I want him to have more opportunities than I did. My parents did a wonderful job helping me get a head start in life. I worked to earn money that went above my allowance I was given so I could purchase things I wanted. They saved for college and helped me pay for in-state tuition and more. I was an authorized user on their credit cards to help build my credit, which helped me buy a car and house later. They taught me so much, but a lot has changed since I was that age.
For kids today there are new ways to save for college that will not hinder them getting student aid. Think of accounts outside of a 529 account. There are more scholarships available. Kids may want to take a gap year or instead try a trade school which can be just as desired as a four-year traditional degree and cost less. Most banks have kids’ savings accounts or credit cards that are specifically made for the purpose of helping a child build credit. There are budgeting apps that can be used to help teach them how to manage money. Greenlight Financial is one that comes to mind. Financial literacy is lacking in our education system. You can use resources like this to help teach your children about finances. Sometimes the best source of knowledge can be you!
As I thought of all the ways to help my little one, I took a step back and remembered the most important financial lesson, do not sacrifice your retirement to fund your child’s way through life. We often see parents saving more for their children to go to school than they are in their retirement plans. When it comes time to retire, they are severely behind and cannot make it up in the 10 years they have left to work. Meanwhile, the child gets a free ride to school. Yes, they do not have debt when they graduate, but if something were to happen to you and money runs out, your kids cannot bail you out.
There are so many ways to help your children succeed financially in life, but there is no magic code that works for everyone. We need to remember that all kids are different, and we can help them but ultimately when they leave the nest they need to fly on their own!