Thursday, December 27, 2018

Instead of Paying for Your Child's College, Get Them This!

Many financially savvy parents know that by paying for their child's college education they will be giving their offspring a huge leg up on their future.  Without crippling college debt, their kid(s) will be able to possibly afford a home, get married, and start a family.  The incentive to bust your butt to save for your child's college expenses is there, and the only thing keeping most people from doing more of it is the need to also save for retirement.

Image result for rental property

But let's put the retirement problem aside.  Let's pretend you don't have this problem and can indeed save for your child's college expenses without sacrificing retirement savings.  I'm here to tell you that even though you may be doing a noble, caring, parenting act, it's now a wrong financial move.  Saving for your child's college education is a losing endeavor.  Here are three reasons why:

1) A moving target.  College expenses go up every year.  You'll never save enough.  You better be wealthy!  

2)  Your child will want to go to grad school.  Many students need advanced degrees (Masters or Ph.D's) to compete in their field with the thousands of other kids out there trying to do the same thing.  This means that your child will need more of your money, OR they will use student loans to pay for their grad school education, getting in debt anyways.

3)  Your child will major in something that isn't easily employable.  Sure, they won't have any college debt, but they'll have a low-paying job, nothing to do with their major/degree.

The Traditional Path Leads to Financial Struggle

When your child leaves college, in debt or not, they'll start buying liabilities.  The first liability they'll own is their car.  But they won't stop there.  They'll get a pet, dog or cat.  Then they'll want to buy a house with their partner.  Their starter home will become their biggest liability, draining them of cash every month.  Yes, your home is not an asset!  In effect, your kid will end up in the rat race...all because they don't own any most Americans.

What should they do?

They should start out at a Junior college.  Have a part-time job while attending and live at home.  They should take public transportation if you can't pay for their car insurance, gas, and maintenance.  After they get their A.A. degree or skills certificate, they should take a year off from school...but not to slack off!!

Instead they need to double time their work load.  Two part-time jobs or one full-time job if they got a skill.  Live with parents.  Save as much money as possible.  Then they can go back and finish their degree.  They may have to take out some college loans but it won't be as bad since they completed two years at a community college and they saved a bunch of money during that year off to pay for their university expenses, i.e., to complete their degree.

What should you do?

Use the money you saved for your child's college education to buy your child their very first asset!  Buy them an out-of-state (or in state if you live in an affordable area) rental property and put it in their name.  Make sure it is set-up so your son/daughter understands their role in making it provide positive cashflow in their real estate bank account every month.  Your child can claim the property as an investment, rental, on their tax return and after a couple of years, have a track record as an investor for future banking purposes!  

Imagine your child having income coming in from their salary job, AND from a rental property each month.  That's a great start to a life of accumulating wealth.

If all of this doesn't make any sense, watch the video below:

Friday, December 14, 2018

11 Financial Mistakes Teenagers Make

Helping teens is my thing.  And man do teens need help these days.  There are just so many more ways teens can stray, and shoot their future in the foot.  Take the case of this year's Heisman Trophy winner, Kyler Murray.  Within hours of receiving the most coveted award in all of college football, people were blasting him on Twitter for having homophobic tweets in his history.  Tweets he made when he was a teenager!  That's the world we live in...a place where haters are going to find a way to dim or completely turn off your spotlight.  But I digress...

Image result for teens

Anyway, like I said above, teens these days need lots of help, and not just with their character and morals.  But also very much so with their financial habits.  While I do my best to make money matters interesting to this breed of teen at my YouTube channel, sadly, most of them would rather watch their favorite Vlogger do something crazy or idiotic.  So although I realize that many of you are adults, some of you may have greater influence with a teen than I do as a teacher.

Image result for teens and money

Using compiled responses from some of my students, I've created a list of the ways teens misuse money.  These are, for many, bad habits that they need to break now if they're to avoid being a statistic, namely, just another member of the Have-nots.  Here they are in no particular order:

1)  Having a baby.  This is like a financial deathblow in the teenage years, especially if the teens involved belong to low-income families.

2)  Losing high school textbooks.  This will result in fines students have to pay before they're given their high school diploma.

3)  Buying and consuming illegal drugs regularly.  Wrong on so many levels...

4)  Buying an expensive and relatively new car.  This is a dream for many high school students, but because parents defray the costs of car ownership in many cases (paying for insurance, e.g.) teens don't fully grasp how expensive it truly is (loan, depreciation, etc.) to buy a new car.

5)  Upgrading a car.  Teens, especially the boys, love state of the art sound systems, carbon rims, racing mufflers, and so on.  Useless additions that only take money away from savings.

6)  Buying vapes or cigarettes.  Teens get hooked on these and getting them to stop is dang near impossible.  This becomes an expense many of them carry over into their 20s.

7)  Spending on online gaming.  In addition to the game consoles, individual games, and accessories teens want their parents to buy for them, now teens are asking mom and dad for credit cards to pay for gaming coins, and in-game purchases.

8)  Trying to impress a date with an expensive gift or outing.  The same can be said of teens in serious relationships.

9)  The senior prom becomes an event that seriously places families in a financial crisis.  Teens are spending way too much on a formality that is forgotten over time.  I barely remember my senior prom!

10)  Spending on fast food meals daily.  Some high schoolers are allowed to leave campus for lunch.  Others go straight to the nearest fast food joint right after school.  All the same.  The result is more unnecessary spending.

11) . Clothing, shoes, and other attire.  Teens are working after-school part-time and spending their money on clothing they don't need.  Why?  To look good at school, of course.

Well, I'm sure teens are finding even more creative ways to spend their money, and we as older people haven't yet caught on to their trends.  Main point is to help teens understand that their spending habits carry over to their adult years and effectively lead them into the Rat Race, or worse, homelessness.  Thanks for reading!

If your teen doesn't like reading, send them my way:
Video: 11 Financial Mistakers Teens Make!