The Expense of Education
If back to school means back to the bank, you’re not alone. The educational journey for your child is important to them and you. Whether they are headed to kindergarten or a college campus this year, you want to do everything you can to set them up for success.
According to a recent survey by COUNTRY Financial, most Illinoisans believe college education is essential. The majority (86%) said a college education is critical when applying for jobs. But the cost of college is unattainable for many – 35% of Illinoisans who responded said they have not been able to save for their education or their children’s education. However, more than half of Illinoisans (54%) are willing to go into debt to pay for their own or their child’s college education. Parents who have saved still don’t think it will be enough to cover the full cost. In fact, more than half (54%) said they anticipate it will cover, or that they were able to cover, 60% or less of the expenses.
Costs Start Early
Expenses begin long before a college tuition bill arrives in the mail. COUNTRY’s recent study found that most parents are willing to go to financial extremes when it comes to giving their children the best opportunities to succeed. Six in 10 of those who attended or are planning for college have enrolled in at least one financially taxing extracurricular activity to help improve either their own or their child’s chances of success. The most popular extracurriculars included SAT or ACT prep classes (13%); private sports (12%); music, language or art lessons (10%); and hiring an academic tutor (4%).
In order to give their kids these opportunities, parents admitted to making financial sacrifices, such as pulling from their savings accounts (26%), taking out a loan (18%), cutting back on retirement savings (13%) and even taking out a second mortgage on their home (5%).
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Experience Versus Expense
Where should parents draw the line when it comes to the cost of college? Similar to the act of putting on an oxygen mask during a flight, it’s important to prioritize your own financial stability before you can help others. Failing to do so can become crippling for the entire family in the long term.
- Set your long-term goals first. Before you can determine what you’re able to afford for your kids today, you need to think about tomorrow. Where do you want to be after the kids have moved out? Talk to a financial representative to determine your priorities, and then develop a budget.
- Be open with your child about what’s feasible. Once you have a plan in place, have a transparent conversation with your child early on about what you’re able to afford so they have realistic expectations moving forward. Let your children know that while you want the best for them, you don’t want to end up living in their basement in the not-too-distant future.
- Look at all available extracurriculars. Extracurriculars, such as traveling sports and private lessons, can quickly drain your bank account. To save money, get creative and consider more affordable, hands-on alternatives. Rather than pay a piano teacher, for example, is there a free tutorial series online that can help your child learn piano? Investing time versus money can help your child sharpen the skills he or she hopes to build.
- Teach them about managing money. While parents are concerned with making their kids seem as impressive as possible on paper, many forget the fundamental personal finance skills that are just as necessary for their long-term success. Take time to show them how to save and learn the value of money. Once they have a better understanding, they’ll not only be financially independent but may also respect the financial decisions you made as they were growing up.
Ultimately, don’t lose sight of your own financial goals as you assist your children. Remember that prioritizing your future does not mean that you don’t care about your futures. Talking with your COUNTRY Financial Representative can help you to identify ways to continue supporting your child without getting off track.
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About the Author: Jon Voegele is an Illinois Agency Vice President for COUNTRY Financial.