Three Ways My Parents Put Me on The Road to Fame and Fortune

The following is a guest post from Marina Shifrin, a writer for My Bank Tracker.

To start out I must say I am far from fortune and even further from fame. I am however; a college graduate with flawless credit, a large financial cushion and absolutely no debt or student loans—all thanks to some smart money moves my parents made.

I would like to preface this list by saying my parents did not come from old money. In fact, when my father was 40 he decided to leave all of his possessions in Russia and move my mother and I to America with less than $300 to our name. This being said, I believe people from any financial background or social status can pave the way for their children’s success.

Here are three steps you can take to enable your child with tools for a thriving financial future.

1. Put Your Kids to Work

When I turned 14 my parents lovingly told me that they would provide food and shelter but anything else would be on my bill. At the time, my typical teenage mind thought, “This is like, totally unfair!” All my friends were getting allowances and didn’t have to do anything for it. I soon accepted my fate and started asking around for babysitting jobs. When I got a little bit older I found a waiting job at a local restaurant and in the summer I also worked as a camp counselor. Being able to appreciate the value of a dollar followed me into my adult life. In college I worked many different jobs. Upon graduation, my diverse work experience gave me a competitive resume helped me land a post-collegejob quickly.

Work permits and age limits can differ from state to state. To find out more information check out The U.S. Department of Labor site here.

2. Start Saving Up

As soon as my parents found out how expensive college is, they started looking into different options. Education was put at the top of their priority list and consequently was put at the top of mine. I believe the smartest decision my parents made in regards to college savings was starting a 529 Plan. You can either choose to pre-pay tuition or set up a college savings, both categories have multiple plans under them. A Big benefit to these plans are that they are tax-advantaged meaning they are not subject to federal tax and in some cases state tax.

Encourage your child to do everything he or she can to help with college costs. Just because they are young and may not have money saved up does not mean that they can’t make a big contribution to help with college expenses.

In my household we were taught, What’s mine is yours. This includes college expenses. My parents sat me down before I left for school and explained that they could only cover about two years comfortably. I was never under the impression that my parents had the funding to completely cover the cost of college. Desperate to help pay for college so that I could continue my education, I found work as a Resident Assistant and was able to cover room and board for two years (totaling around $17,000). I also stayed there over the summer and worked while getting residency: knocking off another $10,000 a year. Both of these options helped cover college without incurring college debt.

3. Get a Credit Card

This may seem like strange advice considering the bad relationship America’s youth has with credit cards. Just because your child gets a credit card, does not mean they have to use it.

A debit card has taught me not to spend money unless I have it: a rule that may be difficult to follow with a credit card. At age 18 my parents got a credit card under my name and have been making small purchases (i.e. groceries, gas etc.) on it ever since. I am 22 years old and have never even touched a credit card. I have good credit without the temptations that usually come along with owning a credit card. It is important that your child starts establishing good credit as early as possible for bigger purchases later down the line.

Establishing strong work ethic, good credit, and financial literacywas a big goal in my family. My parent’s push to teach me about money matters at such a young age allowed me to budget my money wisely and achieve many goals that debt would have hindered. I am confident in my future and owe all of that to my parents.

Are you preparing your child for the future?

Comments

[DIY Investor]

I found it interesting that your parents sat you down and talked about college. So many families don't and it is one of the best talks they can have and helps kids along the path to financial literacy. I suggest sometime in 10th or 11th grade to ask children what they intend in terms of higher education and for the parents to listen. Is it community college, private college, state university or even technical school? Have the child do some research to see the costs involved. Then start talking about how it's going to be paid for. Even for parents who are planning on paying for the whole education it is a talk worth having. In the end I think children appreciate it more.

[Rob]

Growing up I knew college was expensive, but I don't think I had as much appreciation for my parents paying for most of my college as I do now. Even while I was in college I do not think I had a full understanding of what they were sacrificing. Sitting your kids down and explaining it is definitely a great idea - something my parents never specifically did.

[CPA Abroad]

I agree a lot with what is said in the article, and think it is a good story, but point 3 strikes me as strange. If I am reading this correctly, her parents got a CC in her name and have been using it, but she never has, in order to help build up her credit. So, in reality, it is their credit history, not hers. She also states that it is good for the child to start establishing credit as soon as possible, but other than her debit card, which she has used responsibly, she is not actually following her own advice. While it is helpful for her, it strikes me as less than forthcoming to whomever runs her credit when she wishes to rent an apartment, buy a car, or do anything that requires a credit check. Thankfully her parents have done this responsibly, but it is an unfortunate fact of reality that not all parents would do the same. I think point 3 could be dangerous advice to some and raises some ethical issues.

[Kimberly]

It's very impressive that you were able to contribute so much to your college education. I think a lot of people graduate (myself included) without a real understanding of how much work/money goes into paying for college or how much things cost in general. This makes for a rude awakening once you're out there on your own and learning the true value of a dollar as you go. Now that I'm a bit older, I can really appreciate how much my parents had to put in to making it so my brother and I could go to college, which I didn't fully grasp during my college years.

[rzrshrp]

Point 3 may not be what credit bureaus had in mind when compiling people's credit history but it's completely legal and only a bit sneaky.

If the parents were set up as authorized users on the card, it's completely within the guidelines. I think it's quite clever and I may do the same if I have kids. The drawback is that the teen is NOT learning how to use credit responsibly. They may know how to in theory but it hasn't been practiced.

[Reasonable]

Why is it that so many people don't think that it's a parent's duty to help their child through college?

[Holly]

@ Reasonable:

Because once a child turns 18, he or she is an adult; hence, he/she should be able to function in the 'real world' which means working, school, voting, access to transportation, which means...J-O-B.

And also because maybe the parents realize that there is a lot of self-worth attached to making your own money and living on your own terms.

And also because maybe the parents were responsible for their own financial future at 18 y/o.

And also because tuition costs have skyrocketed.

And also because the parents may have more than 1 child to help finance through school.

And also because many parents haven't saved enough yet for their retirement.

And think of a wedding...the parents of the bride may feel it's only a custom and not a duty to pay for the wedding. Therefore they opt not to pay for the wedding, but will pay for college. Or vice-versa.

Our reason: We have had three children who have been in private school since Pre-K. That is our investment in their futures and so far, it is paying off; they are learning way more than just the minimum of how to be academically/socially successful and they will be (counting on my theory here) equipped to handle at least half of their college tuition through working, scholarships, taking the HS AP courses, possibly finishing up in 3 yrs., living at home, choosing a community college, choosing a trade, and so forth. There are many options.

We plan on being very secure in retirement so that we won't need to count on our children in our later years.

And many more reasons, but I will leave them for others to add.

[Budgeting in the Fun Stuff]

Reasonable, because it's not the parents "duty". To my knowledge, a good parent provides sufficient food, housing, love, and emotional support. It's nice if they can or do help with college, but it is in no way a "duty" of parenthood. Why would you think it is?

To the post, I agreed with everything there until Point #3. I do think an 18 year old should get a credit card if they can control their own spending, but I don't think they should be sheltered from it. If your kid would abuse a credit card, they shouldn't get one. Period. I've never carried a balance or paid interest and I've had credit cards for 9 years. If you teach them about credit and debt, they can make up their own minds from there, right?

[Sarah]

1. Put Your Kids to Work

my parents did the same for us. When we turned 16 (the legal age to work) in the summer we had to either get a job or pay rent. we were not responsible for 100% of our purchases - they gave us $30/month - which doesn't go far for a teenager. I think I started babysitting at 12 years old though.

2. Start Saving Up

I have no idea how my parents funded their portion of college. But the agreement was that they would pay for 1/2 of our college up to $4000. It was up to us to take out loans, work, etc. to make up the rest of it. I had a work-study job the whole time i was in college, plus I had a job on the weekends, and I had a scholarship for 60% of the time (until I transferred schools). I also took out student loans. If it wasn't my money going towards school, I dont think i would have had the same drive to do well.

3. Get a Credit Card

We were encouraged to get credit cards when we turned 18. We had a job - why not get a credit card. (and i am a little skeptical of the new laws saying someone needs a cosigner at that age - I dont like the precedent of having a limbo-age between 18 and 21 where you aren't an adult or a child). I still have that same credit card, and that long history is probably part of the reason why my credit score is so high. When I got married I added my husband to the same card, and that is the main card we use for everything. Proper use of a credit card enforces budgeting.

[Tyler]

If all this financial hardship is so valuable, wouldnt the opposite produce the opposite results?

Said another way, will someone never forced to work for money, had all expenses covered by their wealthy parents, never had a Credit Card in their own name, and had every college cost paid by their parents; turn out to be financially irresponsible?

[Holly]

@ Tyler:

Yes, I think so. How can you ever learn the value and rewards of earning if you've never earned?

[Sarah]

@ Tyler: In many cases, yes. Not for everyone, but when people talk about college students being to irresponsible to have a credit card it is because those college students never learned how to control money before they left home.

[BillV]

@Reasonable
I happen to agree with Holly and BFS.
However, I'd be intersted to know why you think differently

[Tyler]

Holly- The same way you learn getting hit by a car is bad- by observing. I dont require doing to learn.

Sarah- although I dont have any data, I would suspect many, if not most, are responsible enough to handle their credit cards. Unfortunately, we hear about the outliers who are not, and thus our basis is skewed to that end of the curve.

Billv- I cant agree or disagree because every situation is different. In my case, I would have found my parents request that I pay for my college silly. Had my parents chose to consume over providing, I too would chose to consume over providing for them should they ever need it. A parent should do what they can to advance the family- so should the child. I will do everything I can to put my children at an advantage.

[Apex]

@Tyler,

According UN-"Reasonable", no. Parents are obligated (v. to bind, compel, or constrain by a social, legal, or moral tie) to pay for their child's college.

Normally I try to give reason's for why someone is clearly wrong but others above have done a very good job and at some point someone's UN-"reasonable"-ness is so apparent that you just have to let their stupidity speak for itself. (Hopefully its obvious that this isn't directed at you Tyler).

[Apex]

@Tyler,

I will say though that if you are proposing financial ease is a way of putting your children at an advantage that I disagree.

Anyone who has developed without needing to persevere through difficulty doesn't have what it takes to weather the storm.

Basic training in the army is not just watching videos or watching someone else do it. You prepare for battle by experiencing battle conditions. Financially, it's a war out there.

[BillV]

@Tyler
Of course you are right, that every situation is different. I don't want to assume too much, but when you say above that you would have found your parents request that you pay for college silly, I assume your parentw were well to do. And that's great.

I would have found it silly if my parents had offered to pay for mine. I was happy that they let me stay home and fed me for my first two years. And they would gladly have let me stay for the last two. But paying for my books, fees, tuition would have been a stretch. Besides income issues, I had 4 other brothers/sisters still in grade and high school.

A good friend of mine borrowed close to 100k to send his to kids to college. He thinks it was worth it. Whereas he paid his own way through undergrad and law school. As you said situations differ.

[Tyler]

Apex- I am trying to disagree just for fun, but I really cant. I would never argue that financial ease is a good teacher. But, I would also disagree that all financial lessons require hardship/action. Paying for someone's college does not equate to financial ease. (If it does, should I stop paying/donating for scholarships? Isn't that paying for someone's college?)

Hardship can also lead to delays. One can not learn everything by doing- it takes too long. Some hardships have a poor risk/reward ratio. In training, one does not 'do' everything.

[Apex]

@Tyler,

That's a balanced approach that I don't disagree with. I think kids need to earn their way and many parents of means ruin them by making the way for them. However the reverse of making them struggle through everything when you can grease the wheels while still letting them earn it is what I hope to do.

[Reasonable]

Easy now. Perhaps duty was too strong of a word. Yikes. My parents felt it their duty to help me and my sisters as their parents had helped them. Certainly all families don't have this ability, and I am quite lucky.

There is, however, an undeniable leaning in this community towards letting kids find their own way paying for college. I was merely trying to understand the other viewpoint.

With the costs of college on the rise, you have to wonder how future students are going to raise the funds.

[BillV]

Clearly your family has been here a long time and done quite well for itself. to which I say "Good for you." It 's not the same for everyone.

More people than is realized are only 3rd or 2and a half generation Americans. For me by example, one set of Great grandparents came here from one country and my grand parents from the other side came from a completely different country.

We are a nation of immigrants.

ps, yes 'duty' was too strong.