Rethinking College and Preparing the Next Generation for Financial Success
Recently, I met with a longtime colleague and friend for lunch. Amid discussions about life, kids, and everything in between, we found ourselves pondering our children's future, generational wealth, and the opportunities we want to present to them. My friend shared his conversation with his financial advisor about setting up a college fund and how it seemed like a gamble. After all, what if the child doesn't go to college? There's a huge penalty for withdrawing the funds for non-college purposes.
I agreed and suggested a better investment would be to place the money intended for college tuition and other funds from birthdays or special occasions into a mutual fund or stock. This way, the money is in a more flexible place, and options are not as limited.
As we talked about the value of college, we reflected on our upbringing, where our parents emphasized the importance of a college degree. While I respect those who believe in this traditional path, I can't help but notice that as technology advances and society evolves, the value of college seems to be diminishing. We must look at college as an investment and consider the return on investment after graduation.
The blueprint our parents followed—going to college, getting a job, staying there for 25 years, retiring with a pension and social security—doesn't apply to today's world. So, for my children, I won't insist on college unless it's critical to their chosen career. Instead, if they want to attend college and expect my financial contribution, I'll ask them to write me a business plan outlining why they need to go to college and their plans afterward. I want them to think through these significant financial decisions, unlike how many of us did when we were younger.
For me, the key takeaway from our conversation is the importance of equipping our children with the financial education they aren't receiving in school. We might not be able to provide them with generational wealth, but the next best thing is to educate them about financial decisions from a young age. As soon as my daughters understand the concept of money, I'll give them a debit card, have them earn their allowance, and encourage them to invest in stocks that interest them. By experiencing the ups and downs of investments, they'll learn valuable financial lessons while the stakes are low.
In conclusion, I believe it's essential to provide our children with financial experiences and lessons to help them avoid the mistakes we made and prepare them for a successful adulthood. By rethinking college and equipping the next generation with the right financial mindset, we can set them up for a more prosperous future.