o matter where you live or what your ethnic and socioeconomic background, you probably want a few things for your children and grandkids: happiness, career success, good health and financial stability.
What if you could put your offspring on the path to achieving all these things, just by making a few good financial decisions of your own?
As it turns out, there are six financial decisions you can make that will positively (or negatively) impact your kids, grandkids, and even your great grandchildren.
Here they are – along with several key questions you should be asking yourself to make the right choices:
Where Will Your Kids Go to College?
We’ve all heard of very successful people who never earned a college degree, from Bill Gates to Steve Jobs to Mark Zuckerberg and more.
I, too, believe that college isn’t the only pathway to career success or financial prosperity. But for most people, going to college does make a huge difference in their future economic fortunes. In fact, studies show that college grads make more than a $1 million over a lifetime than high school graduates.
So consider this question: Where will you send your kids to college and how will your family finance your children’s higher education? I’m not suggesting that you need to push your child to attend an Ivy League school or any of the nation’s elite private or public institutions? On the contrary, too many parents send their children to the wrong school and it starts a downward economic cycle, one in which the student or the parent winds up in way too much debt.
The “best” school for your kid is the one that’s the best fit – financially, academically and socially. Don’t send your kids to some undergraduate program where he or she will wind up burdened at graduation with $50,000 or more in college loans.
For those who choose graduate or professional programs, such as medical school or law school, it’s very common for those students to have $100,000 or more worth of student loan debt.
Whatever the educational goal, be mindful that there at least four smart ways to pay for college or grad school without student loans, as well as numerous ways to save money on college tuition.
Who Did (or Will) You Marry?
Yes, I know that marriage isn’t a business or financial decision. At least, it’s not about finances alone. But let’s start with a basic premise: marrying someone who is financially responsible is more likely to lead to an economically stable union than is entering into marriage with a financially reckless person.
Still, a sustainable, happy marriage obviously involves more than knowing how to wisely save, spend, invest or donate money.
The choice of a life mate is also clearly a very personal decision. But if you don’t make sure that you’re on the same page with your spouse, or a prospective spouse, you could be setting your marriage up for failure.
Divorce – even a so-called “good divorce” – will then have a lifelong impact on your children, influencing their children too. Not to mention that divorce can be terribly costly, and often leaves one or both parties (especially women) in near-poverty.
So before you tie the knot, make sure you have lots of conversation about your goals, interests, values and expectations on a number of fronts. You don’t have to agree on everything. But it’s probably not a good idea to compromise on “deal breaker” issues if those same issues will just rear their ugly heads later and lead you to divorce court.
Do You Have Life Insurance?
Will you leave life insurance for your heirs or not? This is a financial legacy question, as much as it’s a question about long-term vision and sacrifice.
Most people are far too focused on the present (“I have bills to pay today!”) that they can’t think about smart and careful planning for the future. But it’s a huge financial mistake to only consider today’s wants and needs.
If you want to do something practical that benefits the next generation, especially your children, do them an enormous favor and consider buying low-cost term insurance that could provide for your offspring in the event of your death.
When you are more comfortable, and can afford the higher premiums, look into permanent life insurance, which builds cash value. Also, unlike term insurance will expires after a set number of years, permanent life insurance will produce a guaranteed death benefit as long as you pay your premiums.
Where Do You Live?
Will you teach your children that the world is open to them, or that they must “stay on the block” and never venture far from where they were born or where you currently live? If you fall into the latter camp, consider your own current location.
Is it ripe for possibilities or do you feel trapped? For those who live in high-cost areas, or places where there isn’t much economic opportunity, why would you want your children to be stuck there? A move may be the best thing you ever did.
You can move to a different part of the state, out of the state entirely, or even out of the country. A smart relocation could be a critical financial decision on your part that sets up your current and future offspring for generations for to come.
How Do You Manage Your Personal Finances?
Kids learn a lot, not just from what we say, but from what we do as well. And even when you think they’re not watching, children pick up subtle and not-to-subtle lessons about everything, including how finances are handled.
Think objectively for a moment and ask yourself this: what do your kids see about how you manage money? Are they learning good long-term fiscal skills, or are they being taught all the wrong things based on your words and deeds?
None of us is perfect. So even if you’ve made your fair share of money blunders, will you share your personal finance mistakes with your children, as well as your successes? Both can be helpful and instructive to your offspring – by teaching them what to do, as well as what not to do.
Do You Encourage Entrepreneurship?
Teaching your kids to have an entrepreneur’s mindset can be an invaluable financial gift. Mind you, this is different than teaching your kid to be an actual entrepreneur.
If your children aspire to business ownership, that’s terrific. But even if your son or daughter works for someone else, they can learn the positive traits and practices of ownership: things like hard work, creativity, accountability and resilience.
By making a commitment to an entrepreneurial mindset and fostering financial and work-related independence, your children will learn how to create opportunities for themselves – even during down economic times or when no one seems to be hiring.
These six financial decisions can have long-lasting ramifications that benefit your family for decades and generations to come. If you want to improve the odds of this happening, and for the sake of your kids, be sure you make the right personal and financial choices.