FORT WORTH, Texas, March 10, 2016 — Always follow advice from those who have succeeded at whatever it is you are looking to achieve. If they haven’t walked the walk, then ignore them if they try to talk the talk. That’s my No. 2 rule. My No. 1 rule is always be kind to yourself and others.
That said, listening to your parents’ advice on money matters may not always be the best method of learning how to balance and improve your financial situation. From kindergarten sing-a-longs to college graduations and career choices, parents dream of their children’s success throughout their lives.
Good parents will tell you that they do anything and everything for their children, from showering them with gifts they desire, buying them the latest and greatest toys and clothing fashions and taking them on vacations to their favorite places.
Sounds good, right?
The problem with this kind of parental behavior is that the majority of American families hold over $15,000 in credit card debt and over $150,000 in debt from other sources such as student loans, car loans and mortgages. Today’s young Americans are being taught that having debt creates good credit and is absolutely necessary for getting ahead, but this is simply not true. Creating too much debt becomes a negative pull on one’s life circumstances and ought to be considered only in dire situations.
What today’s parents are not considering when they envision their children’s future is that the lessons they are teaching their children along the way about money and finances and especially credit are poor ones. Parents are the role models children look to first for lessons that will help them navigate their lives when they grow up. But if even good, well-intentioned parents are not living a life of financial freedom, how can they expect to teach their children to do so?
A perfect example of family financial management is the way families deal with college planning, savings and expenses. Once a child is born, the college clock is running. From that day forward, it is 18 years before he or she leaves for college.
Today, the average state resident cost for public college is $9,000 per year. If parents put away $200 a month for the 18 years prior to their child’s first day of college, they will have $43,000 when their baby becomes a college freshman. This breaks down to less than $7 per day, the cost of cup of fancy coffee. Day after day, month after month, year after year, the total of systematic savings will increase. The result? On that day in the distant future when that child leaves home for college, any additional expenses will be minimal, and possibly nothing at all if the child has earned grants or scholarships.
Sounds simple, right? It is. And yet, very few parents take any steps toward paying for their child’s college expense until a year or two before the date arrives. By that time, finding the money needed for college becomes an urgent situation, as families scramble to find a solution.
Unfortunately, the most common solution is that parents opt to push their child into taking out student loans to pay college expenses. Four years go by and the child graduates with $43,000 in debt. If the loan has a 10-year payoff period at 4 percent interest, the monthly payments will be $440. That final payback will also include over $9,000 in interest.
So to recap: parents, often with a four-year or more college degree, who cannot afford to put away $200 a month towards their child’s college education fund encourage their child to take out loans that will put them tens of thousands of dollars in debt as soon as they walk off the dais at graduation. Where’s the logic in that? There is none.
Being systematic about your life from day one and creating and implementing a college savings plan are the key steps every parent should take. But what if you turn 18 and find out that your own parents didn’t create a college fund for you, meaning you are now without money to pay for college?
Be proactive. Talk with an expert in finding funds for college that do not require being repaid. Apply for scholarships, grants and financial aid. Instead of going to school full-time and not working, get a job and go to college part-time at a less expensive school. Use your income from the job to pay for tuition and expenses. There are loads of resources available. You just have to take the time to look.
Stay focused on the prize and always remember rule No. 2 — only take advice from those who have succeeded at what you are looking to achieve. Follow this rule and you’ll minimize the time to learn how to do it as you enjoy the blessings that flow from bringing your dreams to life.
Click here for reuse options!
Copyright 2016 Communities Digital News
This article is the copyrighted property of the writer and Communities Digital News, LLC. Written permission must be obtained before reprint in online or print media. REPRINTING CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.
Correspondingly, Communities Digital News, LLC uses its best efforts to operate in accordance with the Fair Use Doctrine under US Copyright Law and always tries to provide proper attribution. If you have reason to believe that any written material or image has been innocently infringed, please bring it to the immediate attention of CDN via the e-mail address or phone number listed on the Contact page so that it can be resolved expeditiously.