This Back-toSchool Season, Talk to Your Graduate about Money
The start of the school year is quickly approaching. If you have a child entering college or the workforce this fall, now is a great time to talk about money. Consider the tips below to guide the conversation:
Help your child establish a budget for the next phase of life. A new phase of life often brings a new set of expenses. Begin by exploring the new costs your child may incur and offer to sit down and help them create a budget. For high school graduates, new expenses can include tuition for college, textbooks, housing, food and discretionary spending. Online estimators can be useful tools to discern how to allocate funds by category. If you typically covered your
child’s expenses throughout high school, educate them on what a typical grocery bill or trip to the movies can cost. This will help them gain perspective on their expenses going forward.
Set financial expectations. As your child grows toward financial independence, it is beneficial to have a conversation with them about what help they can expect from you, if any, and what costs they are responsible for. If your child is headed to college or trade school, discuss how tuition will be paid for and whether you’ll cover any associated room and board expenses, technology fees, travel to return home, etc. Can your child rely on scholarships or help from a 529 plan? Will they need to pick up a job? To help answer these questions, encourage your child to fill out the Free Application for Federal Student Aid (FAFSA). All students can apply regardless of their family’s financial status. The FAFSA process will let your child know what federal financial aid may be available to them. If loans need to be taken out by you, your child or both for school, review the terms, including interest rates and payback schedule. If your child is headed directly into the workforce, discuss how to approach paying for rent, commuting to work, and other common expenses. Determine if your child can look to you for help in their first few months of
expenses as they get on their feet. Discuss what bringing home a post-tax paycheck looks like and advise on saving and spending income.
Consider alternate ways to help your kids. While it’s natural to want to support your child as much as you can, it’s important to think about how to thoughtfully transition the financial responsibility to their shoulders over time. As a starting point, consider the difference between funding a key milestone – such as college tuition or a car that’s necessary for their employment – and funding ongoing daily lifestyle expenses or wishes, like concert tickets or meals out. Some parents desire to cover all expenses while a child is in college so they can focus on their education. If you share this viewpoint, set any boundaries and decide an end date of when they will be fully responsible for their own expenses –perhaps at graduation or when they land a full-time job. Additionally, when a large expense arises like a new car or graduate school, consider cosigning a loan instead of writing a check. This approach can help them lock in a lower-interest rate or more favorable repayment terms, while encouraging some financial independence.
Set boundaries for future milestones. Once expectations are established for the financial responsibilities in your
child’s next phase of life, have a conversation with your spouse or partner about how you’ll handle future milestones, such as a wedding or home purchase. Giving money to adult children can be a sensitive subject, and it’s an important one to be on the same page about. If you and your partner have work to do to align your viewpoints you’re not alone: recent research from my firm, Ameriprise Financial, found that 72% of couples support adult family members financially – yet 14% of couples disagree on how much financial support to give. Have open dialogue about how much monetary support is important to you to provide and consider putting a financial plan in place to guide future decisions.
The back-to-school season is a great time to consider what financial preparedness looks like in the next phase of your child’s life. Know that your financial advisor is there to help you establish your financial strategy and
comfort level with helping your children financially while staying on track to meet your biggest goals.
Duane J Lusson, CFP, ChFC, CLU, MSFS, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Ottumwa, Iowa. He specializes in fee-based financial planning and asset management strategies and has been in practice
from January 3-26, 2024, among 1,510 American couples (3,020 total respondents) with $100,000 or more in investable assets. Primary respondents were between ages 45-70 and within 10 years of retirement. For further information, including verification of data that may not be published as part of this report, contact Ameriprise or go to ameriprise.com/couples. Artemis Strategy Group
The Sound of Silence
Over the weekend, we had a friend visit that formerly lived in the area. She has since moved to live in a small city in Iowa. As is our usual routine, we spent a lot of time sitting on the porch, drinking coffee as we chatted about everything and nothing. Several times, the conversation turned to how quiet it is in the country. She lives in a suburban part of town, well away from highways and major streets, but a person can never escape the sounds of cars, ambulances, fire trucks, and police cars. They combine to make a constant background noise. If a person lives in town, they eventually become accustomed to the constant sound. If a person, like me, is exposed to the city sounds, it would take quite some time to adjust. The opposite is not
generally true. A person raised and living in a city can usually adjust to the lack of noise very rapidly, though this is not always true. Our daughterin-law is from Singapore. There are more people in Singapore, an area smaller than Davis County with twice the population of the entire state of Iowa. On her first visit to our house, she found the quiet rather disconcerting. Having spent her entire life within the sight and sound of people and vehicles, she found our place isolated. When my wife and I visited Singapore, we found the noise and crush of people to be stifling. Any time of day or night there is the constant drone of traffic accented frequently with the high-pitched whine of a super-car speeding down the highway. We did not adjust to the sounds of the city, and I do not think our daughter-in-law adjusted to the lack of sounds in the country.
Very few of the sounds we hear at our place are man-made. We can hear a car go by on the gravel road up the hill at the end of the driveway, but this only happens a few times each day. When a vehicle does use our road, the dogs go on full alert, assuming it must
be coming to our house. More times than not, they are correct. Other sounds we hear are made by nature; birds singing, frogs croaking, or the wind rustling through the nearby trees.
If we do hear something like a siren, it is disconcerting as we know someone is having problems and we probably know them. A gunshot off in the distance is easily ignored as we know someone is either target practicing or riding the neighborhood of another raccoon. In the cities, it is just the opposite. The sound of an ambulance or firetruck is just more background noise. The sound of a gunshot is a reason for concern. During early morning coffee on the porch, we listened to the sounds of hummingbird wings as they traveled along the flower nearby. A light breeze rustled through the oak trees and an eagle called as it circled over the lake, hunting for fish. The only other sound around was the conversation as we caught up on the news of families and friends and enjoyed the time together. To me, and people that have experienced it, the quiet of the outdoors is good therapy.
