It’s easy to assume that the role of a parent diminishes as a child approaches high school graduation. This is when many parents choose to step back and allow their kids to become the primary decision-makers in their own lives.
But the time between high school and college is more than just a symbolic transition from childhood to adulthood – it’s a period of life-changing and complicated decisions. How your child navigates the questions of school choice, financial aid and student loan debt will have a major impact on not just their college years, but the trajectory of their entire adult life.
You can’t make those choices for them, but you can help guide them through the process. Here’s how to do it.
Apply for the FAFSA Together
The Free Application for Federal Student Aid (FAFSA) is the form that determines how much financial aid a student can receive. The federal government uses the FAFSA to calculate a family’s expected financial contribution and then decides how much the student should receive in federal grants and scholarships.
Universities also use the FAFSA to assign their own financial aid, both need-based and merit-based. Families can apply for the FAFSA starting October 1, and it’s best to apply as soon as possible.
Keep your child in the loop with the FAFSA so they understand how the process works. Explain why you can’t afford to pay for the entire tuition bill and how they’ll need to find outside funding.
Parents have to fill out the FAFSA every year to account for any changes in income and family size. If you suspect your financial situation will affect your child’s FAFSA results, let them know as soon as possible.
Explain Federal and Private Student Loans
There are two types of student loans, federal and private. Federal loans are backed by the Department of Education and have a variety of income-based repayment options for struggling students. Parents fill out the FAFSA to determine student loan eligibility.
Private loans have higher interest rates and are less likely to have income-based repayment options. If your child loses his or her job after college and can’t afford payments, the private lender is unlikely to work with them. They’ll have more repayment options with federal loans.
Most students borrow private loans after they reach the limit for federal student loans. Parents often have to cosign private loans, because the lender needs an adult with a solid credit score and stable income to provide assurance that the loan won’t default.
Parents and students can both take out federal loans to pay for a college education. The government has a special Parent PLUS loan program which allows parents to borrow the difference between the attendance cost and any other financial aid their child qualifies for.
If you’re going to take out a student loan for your child, decide early on who will be responsible for paying it back. Will you ask your child to take over payments after graduation, or will you handle them yourself? If you take out a loan in your name, your child won’t have any legal obligation to pay them back.
Encourage Your Child to Apply for Scholarships
When I reached the second semester of my senior year in high school, all my motivation went out the window. I was ready to graduate and start my new life. I had already been accepted to college and had a decent financial aid package. I spent my free time watching movies and dreaming about how to decorate my dorm.
My parents and college counselor encouraged me to apply for scholarships, but my senioritis was too strong. The bulk of my financial aid was already accounted for, and I didn’t want to spend hours working on an application for a $500 scholarship.
It wasn’t until I started paying back my student loans that I realized what a big difference all those little scholarships could have made. I was only earning $1,750 a month after taxes, so all of a sudden $500 seemed like a big deal.
Encourage your child to apply for as many scholarships as possible – even the ones that seem like a long shot. Remind them to keep applying even after they start college. I got a few scholarships as an upperclassman that reduced my loan burden.
Help Them Understand their Student Loans
When I was in high school, I applied to both public and private colleges, including ones I knew I couldn’t afford. My parents made it clear that borrowing $100,000 to get a journalism degree wasn’t a wise choice, so I made my final choice partly based on affordability. Even then, I didn’t understand the impact student loan debt would have on my life.
When I graduated college with $24,000 in student loans, it took me five months to find a full-time job. I eventually landed a gig as a newspaper reporter making $28,000 a year, and shortly after that my first student loan payment arrived. The payment was $350 and I was making $1,750 a month after taxes, so 20% of my take-home pay was going to student loans.
This was a hard reality for me to accept. I had been so responsible, choosing an affordable college and not borrowing more than I thought I could pay back – so how was my debt burden still so high?
I was able to scrape by and make the payments, but I didn’t have much left over for discretionary spending. Most of my weekend nights were spent in my cheap apartment watching Netflix, and a candy bar from the nearby gas station was the fanciest luxury I could afford.
Give your child a mock budget to show how student loans will affect their life after college. I wish I had understood how my loans would affect my ability to travel, pay for car repairs or splurge every once in a while. Show them how choosing a more affordable school will provide more options after graduation. Even if they still choose to take on significant student loan debt, they’ll do so with a full understanding of the consequences.
It’s easy to assume that the role of a parent diminishes as a child approaches high school graduation. This is when many parents choose to step back and allow their kids to become the primary decision-makers in their own lives.
This post is for separated and divorced parents.
While Marie Kondo suggests you get rid of people in your life who do not bring you joy, your kids’ other parent cannot fall into that list. Like it or not, they are in your life forever.
At least until your kid graduates high school (and maybe college, depending on the state you live in, and terms of your co-parenting agreement), you are bound to your kids’ other parent in terms of navigating parenting time, medical and education decisions, and all the financial maneuvering that goes along with it.
While a court order or divorce settlement may offer some guidelines about who pays how much, and for what, there are likely many other financial decisions that must be made.
Here is how to navigate financial co-parenting challenges without winding up in court — or screaming at each other on the front yard.
Challenge: Managing daily expenses
One of your main goals is to avoid bickering over small things, and stockpile your argument juice for the big negotiations [a.k.a. negotiations]. Joking aside, even amicably separated parents want to avoid collecting receipts, busting out calculators and otherwise managing a heap of small expenses every month.
One family I know has a very warm co-parenting relationship, splits parenting time 50-50, and and the parents earn about the same. There is no child support or alimony paid. All out-of-pocket expenses for the kids are put on a credit card that is held in both the mom’s and dad’s names. Such charges include clothes, music and sports expenses, school costs, dental and eye care. Both parents pay half the bill at the end of the month and rarely discuss any of the expenses.
Another option is for both parents to put funds into a joint bank account, and access the funds with debit cards. This could be equal sums, or pro-rated based on income.
Challenge: One parent has more expensive taste for shared expenses
In the event that a spending decision falls on the parents to work out, and they cannot, default to an average common denominator set by a neutral third-party. For example, if there is disagreement over which child care provider should be used, with one parent preferring a more expensive center than the other, find the average cost of childcare in your area, and split the expense based on that number. The difference between the baseline and the more expensive childcare center is to be paid by the parent advocating for the pricier care.
Alternatively, average the expense of the two daycares in question, split it according to your agreement (50-50, or prorated based on income) with one parent paying the difference [for example, if one center is $1,000 per month, and the second $1,500, agree to split $1,250, and then the parent preferring the more expensive center contributes an additional $250 per month].
In short: If you want something for your kid that the other parent does not want to pay for, you pay for it yourself. The good news is that kids actually don’t need that much stuff. After all, the species perpetuated itself just fine without varsity hockey teams or Montessori preschool.
Challenge: Parents do not share money values
If your ex chooses to buy your kids Air Jordans on a random Tuesday, or eat all their meals at restaurants while going into debt, you may go bonkers as you work to teach your shared kids about budgets, saving, and frugal living.
Here is the hard truth about co-parenting, whether you are happily married and cohabiting, or sharing children with a person with whom you were never romantically involved:
You can’t control the other person.
If it is not an option to come to a friendly agreement about what you will teach your kids’ about the value of money, then you have to accept that you cannot change that. After all, that difference is likely one of the reasons you’re not a couple any more.
Without speaking poorly of your child’s other parent, model the behavior that you want to teach your children. Speak openly with them about the importance of working hard, living within one’s means, budgets, saving, investing and giving back. Put your kids on an allowance program, and insist that they contribute a portion to savings, charity, and the wait-two-days-before-making-a-purchase rule.
Ultimately, we can’t control anyone — including our kids. We can only share what we know, hope they make the best decisions for themselves, and accept our co-parent for whom he or she is.
Challenge: Unexpected expenses
Child support and cost sharing expenses are typically set by courts, and can be amended at any time via expensive lawyer negotiations, or painful court dealings. Instead, suggest with your ex an amicable way to manage unexpected expenses. These can include:
Tutoring or other academic expenses
Short-term expenses related to extracurriculars, like prom, traveling sports, a music camp
Suggest to your ex that each of you contribute a set sum monthly to a joint savings account to provide for these expenses as they come up.
Maintain transparency about expenses by creating a Google Drive folder (it’s 100% free!), where each of you can upload receipts.
Alternatively, there are a number of co-parenting apps that can be helpful for sharing expenses, as well as managing schedules and other co-parenting challenges: Our Family Wizard, and SupportPay are leaders in this space. Records on both apps are widely recognized by most family courts in the event you need to go that route.
Challenge: Kids only see one parent buying stuff
A typical child support arrangement is the dad sends the mom money, and the mom coordinates the payment of extracurricular activities, birthday parties, clothes and school supplies. The dad is resentful because his money also contributes to these expenses, but the kids don’t see that contribution.
A solution is to amend the support agreement so that the father sends less money each month to the mom, but is then responsible for coordinating and paying for a specific expense — such as clothes shopping.
The system in which both parents share a credit card for kids’ expenses, or contribute to a joint checking account designated for children’s out-of-pocket expenses for which both parents use debit cards is another solution.
Challenge: Money is lost in the mail
It’s 2019. No reason to continue with paper checks or cash, people!
When exchanging money with your ex, whether directly from and to each other’s accounts, a third-party account, or to babysitters, camps or other third-parties, use fee-free, electronic transfer apps like Zelle, Paypal, or Venmo. Funds transferred via these services is immediate, trackable, and can be set to auto-pay if applicable — minimizing communication, reminders and conflict — the key to happy co-parenting, no matter the topic!
When I was in the 7th grade, my bestie at the time and I wanted to save up for a shopping spree. We put our middle-school brains together, and devised ways we could earn enough to buy whatever we pleased at the mall. Our goal? To save $500 each.
We posted flyers around the neighborhood advertising our lawn watering and pet-sitting services, held yard sales, and peddled candy in between classes. While we fell short of our goal, we had a lot of fun and learned what it took to make a buck.
Whether your child ends up being a creative freelancer or CEO of a startup, he or so doesn’t have to wait until college to learn how to start a business. Here are some pointers on teaching your kids entrepreneurial skills.
Start With One Business Idea
Whether it’s selling lemonade from a corner stand, art at a crafts fair, or home baked goodies at a school-sponsored sale, it’s always helpful to start with a single idea. If your kids are having trouble picking one business endeavor to start with, ask them what they enjoy doing or might be naturally good at.
Next, brainstorm ways they can turn these talents into profitable ventures. Check out platforms such as Etsy, Society6, and Shopify to see what kinds of goods are trending. What is it that people want to buy? How much will they sell their product for, and to whom will they sell?
For instance, when Brynne Conroy’s youngest child wanted to fill up her piggy bank as the family prepared to visit Disney World, Conroy hadn’t started issuing an allowance yet. She used it as an opportunity to talk about the different ways one can make money. They decided they wanted to sell a product, and that the product would be art.
“Lots of crayons and watercolors later, we realized we needing something to mount this art,” says Conroy, who is the creator of Femme Frugality and author of The Feminist Financial Handbook.
They went to the Dollar Store to pick up a bunch of picture frames, which her child agreed to repay her for from their initial profits. When they got home, they identified a target audience. That audience turned out to grandma, because she loved her granddaughter’s art and would be more than willing to pay for it. “Minimal sales pitches required!” laughs Conroy.
Create a Shark Tank Challenge
A few years ago, I taught a “how-to” workshop on entrepreneurship to high schoolers. After I ran through the basics of how to start a business, we played a Shark Tank-esque game. The kids paired up and came up with a business concept that included their type of business, the basic costs of materials and operating expenses, and their target audience. Next, they presented their ideas in front of the group, and the kids had a chance to pick a few “winners.”
What the kids came up with was impressive. From starting a cupcake shop to an electronics resale platform to a print-on-demand service, they were able to devise a basic business plan in a short amount of time.
You and your child’s peers can provide useful feedback to help them shape their ideas. Let them know what you like about their business concept, and how they can be improved. Point to real-life businesses as reference.
Incorporate Money Lessons
While you can teach your kid money management basics by way of an app, game, or by enrolling them in a non-profit financial literacy program such as Junior Achievement, when teaching your kids to be little entrepreneurs, weave in some basic financial lessons to your young ones.
Besides basic math, such as addition and subtraction, you can help them get their head around business terms such as return on investment, inventory, goods, services, and the difference between revenue and profit.
If you like, you can teach them basics about financing. Use kid-friendly language to demonstrate how a loan works, and what their responsibilities are if they take out a form of financing. Going back to Conroy and her child’s art-selling enterprise, let’s say Conroy had issued a loan to her child to purchase frames. Besides having to “pay back” that money, either by doing extra chores around the house, they would’ve owe additional money, or “interest.” And interest is the cost of borrowing money.
Money lessons and business jargon 101 aside, an important part of being an entrepreneur is creativity. And that isn’t limited to creating paintings or writing songs. From finding out-of-the-box ideas to pitch a product to would-be customers, marketing tactics, and fusing two unlike things together to come up with something unique, kids can learn to apply their creative ideas to both conceptualizing ideas and problem-solving.
For example, a clever marketing tactic could be a referral program of sorts. Or maybe they want to combine their love of baked goods with sea creatures, and create sea-themed cookies and cupcakes.
Success Is Secondary
While it’s nice for your kids to make some money, it might be more important that they have a positive experience with their efforts and establish confidence, points out Conroy. The last thing you want to do is turn your children off from future entrepreneurial pursuits.
“While I’m proud my kid followed me through the steps necessary to generate profit, I’m even more satisfied that they felt good about their efforts at the end,” says Conroy. “Hopefully the next time they have a great, profit-generating idea, they’ll be able to draw upon this well of confidence as they initiate their efforts.”
Teaching your children how to be little entrepreneurs can help them learn lasting money management lessons, and give them the confidence to build something from the the ground up. By helping them learn the basic in-and-outs of enterprise when they’re young, they’ll be that much more equipped to tackle the challenges of entrepreneurship in their later years.
President Donald Trump delivers remarks in the Roosevelt Room at the White House in Washington, May 9, 2019Jonathan Ernst | ReutersPresident Donald Trump prides himself on bold negotiating tactics, but his threat to slap tariffs on Mexico for not cracking down on immigrants turns a powerful trade tool into a dangerous weapon that could backfire.Trump said Tuesday he will likely carry through with tariffs on the second biggest U.S. trading partner, in a move that analysts say could ultimately hurt him and create an atmosphere of distrust about U.S. policy. The initial reaction on Wall Street was a stock market sell-off and a flight to safety in bonds. And economists both cut their economic forecasts and changed their view in favor of Fed cut rates this year.But stocks rebounded Tuesday after it appeared Republicans might oppose the president and try to stop the tariffs on all Mexican products, scheduled to begin on Monday. Even so, the damage is done and Trump has shown a willingness to use an economic tool to get his way on other issues, a risky precedent that could breed deep uncertainty in markets and with allies. “This is a clear public policy imperative. It is one of the biggest abuses of a president’s authority that I can think of,” said Tom Block, head of Washington policy at Fundstrat. “Most important is we have a trade agreement with Mexico, and we have a new one we were going to put in place, that to the president’s credit, improves on NAFTA” — the North America Free Trade Agreement.’Creating a lot of distrust’Analysts say Trump’s willingness to slap tariffs on Mexico would lower the bar on putting new tariffs on other trading partners, and makes every trade relationship with the U.S. vulnerable. U.S. and Mexican officials are set to meet Wednesday afternoon at the White House. “We’re creating a lot of distrust around the world. It’s not easily put back together,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “Even if there’s a China deal of some sort, the adversarial nature of this relationship is only going to deepen.”Bank of America Merrill Lynch economists now see little chance the new three-way deal, or USMCA, between the U.S., Canada and Mexico, will pass into law. They also say the Mexican tariffs would help pull down second-half growth to 1.2% from their earlier forecast of 1.8% and last year’s 2.5%. “This is the second downward revision to our forecast this year as a result of the trade war. And with every subsequent action on trade, the pain becomes more severe and threatens to be more persistent. The Fed will not likely sit idle and watch the economy weaken. We are revising our call: we now expect the Fed to cut rates. We look for a 25bp cut in September, another in December,” they said.The economists said there would also be a hit to Mexico’s economy, and they lowered GDP growth forecasts to 0.7% from 1% for 2019 and to 1.2% from 1.5% for 2020.In an op-ed piece on CNBC.com Wednesday, seven former U.S. Ambassadors to Mexico warned that the tariffs could not only do damage to the economies, but make the migrant issue even that Trump is trying to solve even worse. “Higher tariffs will tax U.S. consumers and producers and weaken the integrated production chains that underpin millions of U.S. and Mexican jobs. Damaging Mexico’s economy will cripple its capacity to tackle migrant flows as well as the economic growth that contributed to “net zero” Mexican migration to the U.S. today. Mexico would face a political imperative to retaliate against U.S. exports,” they wrote.’Playing a dangerous game’Dan Clifton, head of policy research at Strategas, said part of what is happening is that Trump’s focus has shifted away from tax cuts and deregulation toward the 2020 election, and he’s making an effort to differentiate himself from the field of Democratic candidates. “This has resulted in higher tariffs and more regulatory oversight of the tech sector. Higher taxes and more regulation is a toxic mix for risk assets, but will persist until the economic data softens,” Clifton said. “As such, the 2020 election is already infecting financial markets and Trump is playing a dangerous game with anti-growth policies while the yield curve is inverted.”In the bond market, yields, which move opposite price, have fallen dramatically, though they were slightly higher as stocks surged on Tuesday. When yields invert, the longer-dated notes, like the 10-year, have a lower yield than the shorter-term securities, like the 3-month bill. An inverted yield curve is viewed as a reliable signal of a potential recession. “I don’t get the logic of using tariffs as the weapon to get Mexico to protect the border. Where does one have anything to do with the other? When U.S. companies are going to get hurt by it, there’s no logic to it,” said Boockvar.Reserve currency statusPolicy strategists do expect Congress to try to stop Trump from moving on Mexico, using an emergency declaration. “Congress would be voting to stop the emergency declaration at the border which is used to justify the tariffs. We would expect both the House and Senate to pass these measures. However, the President would likely veto and therefore Congress would need veto proof majorities in both the House and the Senate,” said Clifton. “While this could be achieved in the Senate, there are probably not enough Republicans in the House willing to vote that there is no emergency at the border. Mexico retaliating on the U.S. may help boost votes in the House but it’s still a large bar to clear a veto proof majority in both chambers,” he added in an email.Senate Majority Leader Mitch McConnell said Tuesday he hoped the tariffs could be avoided. But Trump said early in the day he thought it likely the tariffs, which start at 5%, would go into place and he asked Republicans not to join with Democrats to block him. “The problem is public policy requires some element of predictability. Surprise helped him get good ratings on reality TV, but nobody can plan anything based on this,” said Block. “It’s just a core principal of public policy. I think there’s a lot of interest in his crowning achievement would be the new NAFTA, the USMCA. How can Mexico or anybody come to an agreement on free trade, when on a whim it can be changed? It’s a really unacceptable way to conduct public policy.”Block said the U.S. needs to be careful to protect its reputation — and its reserve currency status, though it is currently not threatened. “The reserve currency is such a national advantage. It’s because of the predictability and rule of law in the United States,” said Block. “There are still a lot of things going for us, but it does create political risk.”Strategists said Trump’s action has made markets lose trust in him, even if the tariffs do not go into place. “The damage has been done,” said Jim Caron, portfolio manager at Morgan Stanley Investment Management. Caron said the damage to markets is lasting and it has increased volatility. “The market might look at a friendly tweet and say that’s good but you’re not going to recover 100 percent of what you had.”Mark Cabana, head of U.S. short-term rate strategy at Bank of America Merrill Lynch, said Trump’s action shows he has no problem having a trade war with multiple countries at the same time, and that raises risks for other potential trade battlefields, like Europe or India. “It shows that he sees this as a tool that can be used for broader policy purposes, and you can have a trade agreement in place, and he will still feel like it’s appropriate to make a one-off adjustment to tariff policy. And he’s relatively unchecked on the grounds he’s using these tariffs,” said Cabana.Cabana agreed that there’s a new skepticism in the bond market. “Even if trade is resolved in six months down the line, we don’t know where the Trump put is. … The Powell put, that is the first one to be struck,” Cabana said.WATCH: How the tariff risks may impact Fed policy
Slovak presidential challengers unite in bid against ruling party
BRATISLAVA (Reuters) – The leading opposition contender in Slovakia’s presidential election quit the race on Tuesday in a move to consolidate voter bases and better challenge the ruling Smer party candidate. The two-round vote in March will test the three-party governing coalition a year after the murder of investigative reporter Jan Kuciak and his fiancee ignited the biggest protests in the central European country’s post-communist history. The killings, over which four people have been charged though the motive remains unclear, sparked an outcry over perceived state corruption and impunity, and long-time prime minister Robert Fico resigned to keep his government intact. They also dented his Smer party’s standing atop opinion polls, and concerns for the rule of law and state of democracy are expected to be central themes in the election campaign from which the opposition hopes to benefit. Scientist and entrepreneur Robert Mistrik had been the main challenger to Smer candidate Maros Sefcovic, a career diplomat and currently the European Commission vice president who holds a narrow lead in the polls. But Mistrik bowed out of the race on Tuesday and endorsed environmental lawyer Zuzana Caputova, who is backed by a number of opposition progressive and liberal parties as well as outgoing president Andrej Kiska. “I express loud and clear support for Ms Caputova. Data to be released this week show clear momentum for her,” Mistrik told a news conference. Referring to Sefcovic, he said he was urging voters “not to let the pawn of Robert Fico become president”. Both Sefcovic, 52, and Caputova, 45, pledge to reaffirm Slovakia’s status as a member of the European Union and euro zone, making the country unlikely to join the rising tide of euroscepticism around the bloc. Slovakia’s president wields little day-to-day power but must approve the formation of new governments and appoints judges to the constitutional court. The latest AKO opinion poll last week put Sefcovic at 19.7 percent, Mistrik at 18.2 percent and Caputova at 17.4 percent. The next parliamentary election is due in 2020.
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