Things we think about for our kids that may be relevant to your family
14 short years ago, my wife Heather and I welcomed into this quiet world our “loud and crazy and beautiful” youngest daughter, Libby. Just last month, she headed off to her first day of High School – yikes. As many of you also ushered your kids off to high school or college, I thought it would be helpful to share a quick list of things that I think about for myself and also tell our clients:
If you have them, use them. Even if you have some extra funds available, make sure to extinguish college costs (and even $10,000 per year for private high school if you’d like) with 529 assets. People often want to leave these assets alone as long as they can, but we say spend these first. They are most likely conservatively invested, affording little growth.
Not everyone has fully funded 529 college savings plans. That’s OK! Develop a blended approach to help attack the high costs of higher education. Don’t be afraid to have your kids share in this burden. We often coach our families to educate their kids that there is a set dollar amount available to them for college. Any amount in excess of this can either be shared or borne by the kids. That way, they have “skin in the game” when making college decisions.
Most assuredly your kids have some kind of job – babysitting, office help, fast food, caddying, retail, etc. Don’t think you can’t claim income if you don’t have a 1099. Claim your kids’ income and then encourage them to fund a Roth IRA with some or all of this dough!
For all those accountants out there, I’m not talking about journal entries. I’m talking about at the age of 16, get your kid a Debit card and use this to build spend rate discipline. Credit cards are then available for kids 18 and over. Tread cautiously here, but if things went well with the Debit card, spread their wings and get a small balance credit card to start a good base of credit!
As our lovely children become more active parts of society, they take on bigger risks in all they do. Make darn sure that you have sufficient insurance coverage for our new drivers and risk takers!
Quite often, we see families leaving their children on various types of plans – phone coverage, healthcare, auto/homeowners insurance, etc. This is often the easy answer, NOT the best. Oftentimes we can reduce risks at the parent’s level, and increase coverage at the kid’s level by separating this coverage.