Your Children: The Ultimate Value Investment


Your children are going to learn fiscal responsiblity one way or another; it is up to you to make sure it's the easy way.

Ari Winkleman’s story is an increasingly familiar one. After his graduation from The University of the Arts in 2010, the 25-year-old graphic designer has moved back into his parents’ Providence, R.I., home several times. He counts himself lucky that they let him live rent-free and are helping him pay off his student loans, and he is relieved to no longer have to choose between eating and paying his cable bill.

Still, Winkleman knows he won’t be able to live with his parents forever, especially since they plan to make aliyah soon. That is why Winkleman, who runs the website Hipster Jew ( with his brother Charles, is now couch-surfing across the country, visiting friends in cities where he might find full-time work with a design firm and put down roots. Winkleman isn’t worried about what his parents think about his journey to find himself; they support him. He isn’t worried about his financial future, either. He is unconcerned that he may not be able to afford to get married or buy a house one day. “I don’t think about it,” he says. “I don’t think about what will happen tomorrow; I live more day to day.”

He is in the minority, according to a 2012 Rutgers University study of nearly 450 recent college graduates, which found that 58 percent of them believe their generation will do less well than their baby boomer parents have. The same belief was shared by affluent investors over 60 last September when they were asked by financial website Millionaire Corner ( if they thought the millennials would surpass them in wealth. Less than 18 percent of nearly 1,100 respondents predicted they would.

Certainly, there are many reasons to worry about the financial well-being of the generation born between 1980 and 1999. Among them are high levels of unemployment and under-employment experienced by recent college graduates, and the substantial college loan debt they carry. Meanwhile, their boomer parents — who could potentially help them — have been losing their jobs, watching their home values fall and scrambling to shore up their own shrinking retirement funds.

Adam Sherman, the 49-year-old CEO of Firstrust Financial Resources in Philadelphia, raises another concern: The next 10 to 15 years may bring an end to the low tax rates that have been fueling growth for the past quarter-century as taxpayers foot the bill for the rising costs of entitlement programs.

What is a concerned parent to do?

“I think the worst thing to do is to let that apprehension make you a deer in the headlights,” says Ken Kaplan, a 49-year-old resident of New Britain and parent of a 17-, 20- and 22-year-old. He adds, “You can’t live your life scared of the economy and all of the things that might go wrong. What you are scared of rarely comes to pass, but you’d be negligent not to face the facts.”

The facts are clear: It is more important than ever to teach your children how to make the money they earn go further — and to start the education as soon as possible.

Former banker Denise Winston compares financial education to dental hygiene. “You don’t wait until your child is 18 to teach them how to brush their teeth. You’ve got to start way before,” says the author of Money Start$ Here! Your Practical Guide to Survive and Thrive in Any Economy. She has been discussing money issues with her 23-year-old daughter Brandi for years. “I don’t worry about Brandi; she has an edge 99 percent of kids don’t have: a solid financial foundation,” Winston says. Because she understood their importance, Brandi was the only employee in her 20-person office to ask her boss questions about new health care plans being offered and is the only person to enroll in the company’s 401(k) plan.

Like Winston, Kaplan began his children’s financial education when they were little. He and his wife, Regina, purchased $100 worth of stock for each of their kids and encouraged them to save the allowance money they provided. “They don’t spend money now,” Kaplan notes. “They are very cost-conscious.” To give them an early assist on developing good credit, he made them authorized users of his credit cards when they were each just 10 years old — but he did not allow them to use the cards.

Not every parent is comfortable talking about money with his or her children. Winston says moms and dads who don’t feel up to the task or whose children may be unlikely to listen to them can still get the job done by asking professionals such as financial advisers, insurance agents and bankers to step in. Sherman has had such pro bono conversations with some of his clients’ children.

Of course, children also learn from what they see, and parents can set a positive example simply by living within their means. The Kaplans rarely eat out and never rush to buy the next “new thing.” Winston drives a 1998 Lexus with 180,000 miles on it. As a banker for 25 years, she has met her share of entitled youngsters, including one 17-year-old girl who was driving a Lexus and sporting an iPhone, hair extensions and perfectly manicured fingernails. She could not tell Winston how much her car payments were or how much it cost to use her cellphone each month. Winston predicts that when that teenager eventually got her first job, she was not going to be able to fund her current lifestyle. That means her parents would probably get stuck financing her lifestyle or she would not save any money.

Today, many parents support their children even beyond college age as the Winklemans are doing. Some 29 percent of parents of 18- to 29-year-olds are providing regular support to their kids, according to a poll by Clark University in Worcester, Mass. Winston suggests that those wishing to do so set specific ground rules about what they are willing to cover and for how long.

The Kaplans, whose oldest child is 22, have made it clear that they will not pay for graduate school immediately following college. Ken Kaplan, who has a master’s degree in finance and economics, worked two years before he enrolled in graduate school. “That two years of experience really gave me a different perspective on what my career goals were, what I needed to learn, how to understand the book knowledge versus the real world. To me, that’s a crucial element, because if you are going to invest $60,000 or $70,000 or more in that last piece of your education, that’s a lot of money. That’s money that could be for my retirement. Don’t do it unless you know there is a return on investment.”

The family saved for college by purchasing insurance policies for all three children and funding them every month. “These insurance policies are a way of socking away money every month that compounds endlessly; it never goes down in value, and you always have access to your money,” Kaplan says.

Adam Sherman agrees with Kaplan’s strategy. He also likes 529 plans that allow parents and grandparents to put aside up to $14,000 a year ($28,000 for married couples) tax-free for each child enrolled. The plans are a hedge against inflation, letting people purchase tuition credits at today’s prices.

In addition to saving for college, Sherman says parents can help their children maximize their education funds by directing them away from private colleges to more affordable state universities, particularly if there is a need to borrow money.

Adult children also need to think carefully about their desire to go back to school. Corporate recruiter and social media expert Abby Kohut says it’s a mistake for people in their 20s to go back to college simply because they are unhappy with their first job. The author of Absolute Abby’s 101 Job Search Secrets says parents should encourage their 20-somethings to figure out exactly what they are going to do with a degree before they get it, to network and use social media to find people already doing that job, shadow them and learn what they do.

Parents of school-age children, she says, can help them be more employable by encouraging them to have more face-to-face contact with their friends instead of merely texting, to remove questionable photos, bad language and drinking references from their Facebook pages, and to develop a habit of making eye contact with prospective employers.

Keeping things in perspective is also important. As Jeffrey Jensen Arnett and Elizabeth Fishel note in their book, When Will My Grown-Up Kids Grow Up? Loving and Understanding Your Emerging Adult, it is no longer unusual to have seven different jobs in your 20s or even as many as 10. Parents who grew up in a time when career paths seemed clearer may be anxious and dismayed when their children change jobs often. Arnett and Fishel caution anxious parents to remain upbeat for the sake of their kids. They say that parents should talk about their fears — but only with each other or friends who have kids in similar situations.

Meanwhile, Arnett and Fishel say that parents should feel some reassurance in the knowledge that nearly everyone settles down into a steady occupational path by age 30. “This may be later than parents originally expected — and later than they prefer — but at least it’s not forever.” o

Gail Snyder is a Chalfont-based freelance writer and frequent contributor to Inside. Both of her young adult children are living independently. This article originally appeared in Inside Magazine, a Jewish Exponent publication.


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