Helping Grandchildren Financially Prepare for College
(ARA) - Want to involve your grandchildren in paying for college? Get them saving while they’re still young, says grandparents.com money expert, Bambi Holzer. “If children grow up understanding money as a finite resource, they'll understand the need to manage it properly,” says Holzer.
At around age five, children begin to understand how money works. That’s a good time to start teaching them about saving. They'll start to catch on when, for example, they see how one week's allowance may not cover the cost of a coveted toy. Use these and other similar “teachable moments” to initiate discussions about pocketing the change for the future.
While it can be tough, not opening your wallet every time your grandchild says "I want that!" teaches a similar lesson. Let them discover, as you likely did growing up, that saving for what they want is not only fiscally responsible, but psychologically gratifying.
How does it relate to a six-figure education? According to Holzer, who has 25 years of financial experience, “Students who are aware of the high cost of college and who assume some responsibility for paying for it (if even the smallest portion), will assign more value to their education and get more out of it.” She says it all starts with teaching money basics, as early as possible.
Holzer offers these tips to grandparents interested in getting their grandchildren involved in college savings:
Help them start a pint-size college fund.
Make it accessible to your grandchild and make sure he/she contributes to it. Track the account’s growth together, and keep it separate from ones their parents may have established. For a small child it could be a piggy bank or a jar. For an older grandchild, try a passbook savings account or even a mutual-fund account.
Show them the money.
Kids love to do chores for pay -- sweep the floor, rake leaves, carry groceries, feed the pets. Put your grandkids on your payroll. By doing so, they learn the concept of working for money. Pay them in small bills and suggest (perhaps insist) that they put some of that money into the college fund.
Talk about scholarships.
Explain that students who excel in high school may be given scholarships that pay for part or all of their college education.
Consider the cost side.
Students who have a vested interest in paying for college may be more likely to consider the total cost of college when deciding where to go, making options like state schools, community college, and reducing credit hours through high school AP credit more palatable.
Courtesy of ARAcontent
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