Two Graduated, Two to Go

When we sent our oldest two kids to college, we were fortunate that both were going to a school that they were happy to be attending to study subjects they both had great interest in. For us the extra good fortune was that both received some wonderful scholarships that helped with the exorbitant cost of college.

Now that both have graduated with their Masters, I was eager to reflect on what made their experience a financial success when so many times now we hear of the great financial burden which is the college experience.

Financial Aid Kept at Bay

First rule of thumb that we all have to come to terms with, is that the majority of our kids won’t be hired right out of college into their dream jobs paying high salary and bonuses. Since most will start with an entry level position, minimizing the loan portion of the college cost has to be a top priority and made clear that this should be the student’s financial responsibility upon graduating. The four year financial aid package amount should not exceed their expected first year’s salary. This means that either we as parents pay more if scholarship is not available to the student or a lower cost school should be considered.

In both my children’s experiences student loans have been accrued, but both have set up a 10 year pay back schedule that is being carried by each one of them on a monthly payment plan. Obviously faster payment schedule will be explored as income may possibly rise.

Working While Studying

Another habit instituted while in college was “pay to play”. Simply put, we felt that if our kids wanted to go out or do whatever they wanted with their down time while at college, it was perfectly okay for them to do so, as it was their money funding the experiences. Time management was now their responsibility to create time to work, study and play. As long as they were earning their own spending money in a constructive manner, they were in charge of their lives.

That financial independence has carried over to their post graduate time in that managing their budgets is no longer a mysterious process their mom tells them about, but rather a natural extension of simply who they are and what they do. In fact there are several apps and programs they have shown me in recent months that they have started to use to better manage their cash flow. So proud!

The Credit Card

Yes, in both cases once again I chose to find a bank that would allow for a new secure credit card to be issued for each child. They entered college with their own credit cards to be used for emergencies only and if used, had to be paid in full on time with their own earned income. Over time as the credit was developed and the security for the credit card returned, the credit card remained in their possession and is now just one of the credit options available to them. The most important part of this learning curve was the understanding of how to use credit versus cash and the costs versus pros of using either one.

Today both have practical financial experience that lends itself to self-control, the ability to budget and live within their means. Both have options should they want to buy their first home, get a car or simply go on with their studies with credit history and experience to understand the costs associated with lending and finance.

As they embark on their professional lives I can assure you one of the top priorities I’ll be preaching now is for each to set up a retirement account with systematic contributions starting with their first pay checks. I know there are other programs and protection products to be discussed as well, but the long term savings for retirement or whatever it will be for their generation, has to start the day they first start to work.

So two done and two to go !!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individuals. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.