Those with older kids…how are you preparing them for the future financially?

I am mainly doing 2 things to help give them a boost financially.

1. 529 - Contributing $250/month per kid since birth. Should be enough to mostly cover a 4 year public university degree. If they get a scholarship, any money left in the 529 is still theirs to help with other expenses after graduating.

2. Roth IRA - When my older kid started working part-time during high school, I stopped funding his 529 and started funding a Roth IRA. Now he has a good start on retirement savings and it got him interested in saving/investing.

It's tempting to primarily focus on degrees that can be readily monetized. But keep in mind every kid is different. Some are late bloomers. Although some may have struggled in grade school through high school, college may still have value as a different learning environment. It can be a confidence booster for kids that struggled, a reality check for some, but can still be a valuable path for all to experience regardless of outcome.

I planned to cover college expenses for all my kids. A 529 was great at first, but it was supplemented with gains from other stocks and index funds.

But in terms of preparing them financially, the goal was to get them through the college years without debt. Mission accomplished.

I also wanted them to understand debt was not bad and the goal was to have investments with a higher rate of return than any interest rate on debt. Rate aside, I wanted them to have enough investments so that their annual gains in the market exceeded their annual interest paid in debt.

One step toward financial discipline was to tell them I would match their down payment on their first car, dollar for dollar, with the remaining balance and monthly note to be paid by them. Their car buying Bible would be Consumer Reports so that their focus would be on reliable vehicles. They were each able to handle their car notes independent of me, with all paying off the vehicles in no more than 3 years.

Now I'm encouraging them to use independent insurance brokers to shop around for auto insurance every year.

Once employed, I HIGHLY recommended health savings plans. Mission accomplished.

This is all good stuff. Thank you all.

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It's also important to have a social network who will help if they get laid off and need a job, seek investors, etc...

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Wisdom to go by. Its not about being the smartest in the room. Its about knowing the people smarter than you or someone specialized in a certain field, and being able to relate with them.

Years ago there was a top dog in our field who was very young compared to his peers and had much less field experience. He was a savvy guy though. He was like a CEO. He knew general knowledge on how everything worked but he heavily relied on knowledgeable people under him. His asset was bringing everyone together, getting resources for them, morale boosting, sticking up for them when mistakes were made, etc. He was a leader. Everyone respected him even though people on his level were more knowledgeable with nitty gritty tasks/operations.

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In college, the more specific with a major a student can get the better. Accounting, engineering, education, etc all guarantee a job. The generic degrees make it tougher to find a decent job.

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Ya this seems to be an important conversation to have. Making sure they’re informed on the risks and benefits of going to college and choosing a specific degree path based on their goals in life.

Money Guys article on college degrees