When discussing higher education and career plans with high schoolers, the topic of money will inevitably come up in nearly every conversation. From the cost of college to future earning potential for their desired profession, there are many important financial conversations parents should have with their high school-aged children.
Despite traditional four-year collegiate programs being the norm, it’s very important to keep an open mind when identifying potential future career opportunities with your children. Though college is a great opportunity for many young people, it’s not the only one.
More importantly, parents and young adults alike need to realize the most expensive college degree is the one you don’t finish. Unfortunately, this is becoming a reality for many college students. A 2011 study conducted by Harvard University found that just 56 percent of college students complete four-year degrees within six years. For those who don’t finish, the mounting student debt can be crippling.
That’s why it’s more important than ever for parents to have these important financial conversations with their teens to help them determine the right path for their post-high school graduation plans. Here are four essential financial conversations every parent should have with their children after they enter high school:
- Plant your children where they can grow
Though many parents expect their children to go the traditional route with a bachelor’s degree from college, it’s important to realize these programs are not for everyone. Parents need to ensure their children’s future environment is suitable for them. There are many opportunities for your children to pursue a financially rewarding and personally fulfilling career that isn’t taught in a four-year college atmosphere.
For example, if your child is better working with their hands than reading a textbook, let them pursue welding or culinary careers, to name a few.
Moreover, recognize that by pushing your child into an opportunity they’re not on board with, you might be setting them up for inevitable failure. Instead, identify their skills, strengths, interests and more to determine what future paths might be best for them.
Together, you can research the average salaries for those careers and discuss what financial investment for their education makes sense given what they can expect to earn in that profession. Knowing what salaries they can expect to make as an entry level profession in those fields will also help them look ahead to other goals, such as which city they want to live and work in, which will help them understand the cost of living for their desired post-graduation location.
- Partner with your kids
Honesty is key. When parents begin discussing post-graduation plans with their teenagers, it’s important to be honest about what is attainable and what is not. Sit down with your children and discuss what you can afford, whether you’ll be splitting expenses and who will be financially responsible for what.
If families have invested in 529 plans, parents should also divulge savings amounts with their children. Be honest with your kids about how much is available in the fund in relation to how much college costs. After all, the cost of a college education is on average $28,000 per year for a public school, Forbes found. Therefore, sharing this information from an early point in your child’s high school tenure will help to further their future success.
For parents whose children choose to enter the workforce following college, they can have similar conversations with them. Openly discuss how much it will cost to rent an apartment, pay utilities and live independently so they fully understand the cost of living.
- Encourage teenagers to contribute to their 529 plans
By the time your child begins their first high school job, their savings should be going into their 529 plan. Even if you know they will probably need to take out student loans to pay for the entirety of their college education, this will at least give them the opportunity to get a head start.
Unfortunately, though, it can be difficult to persuade teenagers to place their hard-earned money into a college fund. However, parents can help children recognize the benefit of this decision, such as not having several extra years of student loan debt to pay off. Explain to your children why investing their savings now will help them long term.
- Discuss what career paths interest them
As many young adults are discovering what career paths interest them, parents should be willing to openly discuss the financial reasons for choosing the best college for their career plans.
Depending on what programs they’re interested in, parents should then help identify what path needs to be taken to get there. If that path is college, find schools with strong programs for their intended majors. It’s also important to note, parents should help their children determine whether a private school can offer a stronger program than a public school can, as public schools are significantly less expensive.
Talk to your children about whether it’s worth it to pay extra money to attend a private school for the salary they are going to make in their desired career. For some degrees, it doesn’t make financial sense to attend a costlier school, when a less expensive one might provide the same degree and an equivalent education to prepare them for success in the workplace.
Finally, make sure your children examine how long it will take their yearly salary to match or exceed what they paid for each year of their college education. This is a great benchmark to use when deliberating whether it’s worth it to go to a more expensive private school. Ideally, your children should be making a yearly salary that at least matches what was paid per year for their college degree.
Interested in learning other ways you can teach important financial lessons to your children? If so, please click here to contact me to learn more about my complimentary workshop, Raising Financially Fit Families, which I present to groups and organizations of all sizes.
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