It is almost impossible not be proud of the many accomplishments of our children – honor roll, athletics, acts of kindness. This pride continues when young adult children approach their college years and report impressive ACT/SAT scores and are accepted by prestigious schools. College is one of the largest investments parents and their children will make, often only second to the family residence. Yet, many parents and children don’t fully comprehend the financial impact college years have on their future. It would be great if on high school graduation day your child could give you two bumper stickers as a sign of gratitude….. “My Child Attends ______ University” and “Proud Parent of a Financially Confident Kid.”
Helping families talk about money is one of the primary reasons I choose a career in financial planning. It’s not always easy to talk to your children, siblings or parents about finances. So, when I work with families on college planning we often incorporate financial literacy and having financial conversations with children as part of the college planning process. Think of it as a two for one opportunity.
Paying for college is an amazing gift we can give our children but I would argue that sending your child off as a financially literate and financially confident young adult might be even better. Basic financial literacy lessons can start as early as age 3 or 4 with discussion in the Target checkout line and gradually shift to having your children practice with money as the best way to learn about personal finance.
I like to think about planning for college while incorporating financial literacy based on the life stage of your child. I included some examples below.
Ages | College Planning Step | Financial Literacy Activity |
| 0-7 | Set your family’s savings goal for college – 25%, 50%, 100%? | Begin paying your child an allowance (5 years +). |
| 8-13 | Evaluate your income and asset structure and potential impact on your future financial aid application. | Have your child plan and budget for a family dinner. |
| 14-18 | Map out your family’s college funding equation. | Pull your or your child’s credit report and review together. |
Parents are not protecting their children by not having important financial conversations. Rather, when you communicate with children about your own financial values, teach them financial basics and then let them practice with money you help them move from financially literate to financially confident. In the words of Joline Godfrey, “Financial literacy is economic self-defense.”
Are you ready to give college planning based on the life stage of your child a try? It’s never too late so don’t worry if your child isn’t 4 but rather 17. Email info@crescendowm.com if you have interest in attending a future workshop on this topic – “Funding your Child’s Education through life stage planning.”