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social strata for our kids

May 31st, 2018 at 11:37 am

Did you read the article recently about class and how movement between classes in the US is almost NIL? It doesn't matter what religion, race, and politics. The biggest factor is where your parents are socially and the elasticity of their position. The higher up you are, the more you can help your children and prevent them from falling down the socio economic ladder. The lower down you are the harder it is for them to climb the ladder.

Of course pretty much everyone reading this here at a place called savingadvice already is giving both themselves and their children a one up. Within your own socio economic position it's likely since you are looking at improving your financial situation or already have, the change to the family tree means that you are making things better for your kids. You are telling them early about things like debt, college, saving, investing wisely, etc.

All factors that contribute to your child's success. So compared to your peers your kid is getting a headstart on things that could drag them down financially. But instead they have parents who may not help as much financially or are able to help more financially because they have their house in order.

As I was reading this article I found myself nodding. That we are going to help our kids as much as possible. They have advantages now from our income but also we are probably going to help them in the future as well.

This came about because so many of us on this board are striving to help our kids with college. It's been written that college and student loan debts are massive (and it really is). But those of us on here I feel are doing better than our peers in helping our children through it financially because we know better and have our own house in order.

I mean we have friends we camped with who recently set aside $50k per kid for college. Our kids are the same age. But DH and I have been putting a little every year aside and we have about half as much. Right now we are considering a lump sum investment into a 529 but if we do then we'll still come out ahead having had saved less over these past 5 and 8 years. Plus the lump sum can be smaller since we'll still be saving our $2k/year.

So the little things like smart saving and wise budgeting this site encourages has helped.

Just musing how changing the family tree a little can show great result.s

6 Responses to “social strata for our kids”

  1. LuckyRobin Says:

    College Loans are probably the number one reason people can't climb into another class. The are a debt sentence. Sometimes they are even a death sentence with young adults committing suicide when they realize they can't pay off the massive loans they took out. I think it is important to train our kids from an early age that they are going to do their first two years at a local community college and their second two years at an in state school. Or they can go to a local or in state vocational college. If there is a university in your county, even better.

    They need to be told they will live at home during those years if they are local to you. Half the college costs are living expenses and going out of state doubles if not triples the full costs. No one needs to go to a more expensive school unless they are becoming a doctor or a lawyer and then they better darn well be applying for every scholarship in existence.

    I think too many parents let their children pick where they want to go instead of giving them the choice of schools where they can afford to go. Also, parents let their kids pick stupid majors. Kids need to pick something that will make them a good income after college. They can minor in stupidity, but their major needs to be something useful that has a good prospect of getting a job.

    And we need to make our kids work and pay for part of their college, if not all. My son will be working for two years to pay for the two years of vocational college he wants to go to. If he saves half his income on a minimum wage job for 2 years, he will have enough to pay for it in full. Once he has his money saved then he will start school. And he will work part-time while in school to provide his own spending money.

    We will help if we can, but right now we are not in a place to. But three years from now, when he is ready to start college, we might be able to. I am hoping we will have paid off our last debt by then.

  2. Jenn Says:

    I didn't read the article that you've referenced. The most important leg up you can provide kids I think is financial education as you mention. That doesn't cost anything - you just need to have the knowledge yourself. Providing financial 'help' can backfire. The authors of The Millionaire Next Door talk about this, which they call economic outpatient support.

    We've opted to pay for college so our kids don't begin their adult lives in debt. But not cell phones, cars, weddings, house down payments, etc. it's interesting to see the differing priorities of families with similar income to us.

    College costs are getting out of hand, and I think it's partially because of the easy access to student loans. It's not going to get better until we collectively stop being willing to pay crazy prices and start thinking twice about taking on big loans. Even if you are going to law school or medical school as LR mentions, where a high salary is waiting at the end of the tunnel, what happens if you don't like the profession after all? If you've got 6 figures in student loan debt, you're stuck.

  3. Debt-free by Thir-ty Says:

    I would definitely agree with us. I'm certainly not in anywhere near the financial comfort zone that a lot of people here are, but I also started way behind the curve. I'm that kid who came from a family where I was taking loans out in my name starting at 18 to help feed my family. I consider myself lucky to have gone to a $200k school and came out of it with only about $40k in loans (no family help, scholarships/financial aid only). I financed my first car at a terrible interest rate because again, no financial help and I didn't think I could get to work without one. No had taught me that that was an incredibly dumb decision and I should have chosen a beater or taken the bus.

    I'm still way in the hole, but I've at least got a shovel and am working my way to dig out of it. My hope is that I can instill better financial principles into my children (if I'm lucky enough to have them), and not burden them in my retirement. If DH and I can accomplish those things, I will consider that a win. It'd be a bonus to be able to help with school, but I think it's a better gift to never have to rely on them, so retirement is our first focus after debt payoff.

  4. rob62521 Says:

    I'm sorry I didn't get to read the article, but I imagine it has a lot of truth to it. Neither of my parents finished high school. None of my half siblings went to college -- I was the first. Besides the academics, there was so much to learn as far as other little things -- financial aid, how to do certain things, etc. Back then there wasn't the handy dandy resource called the Internet. But social standing played a big part in my high school and I wasn't on the right side of the tracks. My guidance counselor and I use that term very loosely, was also the football coach. I think the counseling gig was just to keep him as coach because he told all the girls the same thing: you are too stupid to go to college, become a secretary. He wouldn't give me any college information or financial information. Fortunately the college counselor was amazing and helped me a lot with documents. My mom and dad were thrifty and told me to try and not get a college loan because the future is always uncertain on employment. I was lucky to have enough scholarships to cover half of my tuition. I worked all 4 years and during the summers and graduated without loans. I am not sure that is possible anymore.

    I agree that most of the people here on SA are ahead of the game. And we learn from each other. Finance is really a game and if you don't know the rules and regs, you often miss out.

    Thanks for opening up this discussion.

  5. Joe Says:

    All good points. I agree that some student loans are getting out of hand. Anything over 25K after 4 years is crazy. At the same time, I believe that if you signed the paperwork and spent the money you need to repay the loan - and parents too if they co-signed. I graduated college in 1985 with 13K in student loans. I had them paid off in 3 years. When I was looking at colleges for my daughter one of the College Presidents talked about how many brand new cars he saw in the parking lot everyday. He assumed many were financed and chastised the prospective students that they should be willing to spend more on a college education than a car.

  6. LivingAlmostLarge Says:

    Very much so out of hand. I have to find the article.

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