There are literally thousands of articles on the internet about how to be a good parent in regards to teaching your child about money, or how to best make sure that your children understand personal finance. This is not one of those thousands. Many parents believe that by consistently stashing money in an RESP year after year, they are doing all they can to help their children thrive in today’s world. After all, it used to be that if you got a post-secondary education you were relatively home free in terms of living the middle class American dream. Globalization and accreditation inflation have left us in a world where a Bachelor’s degree, or a diploma in restaurant management just isn’t going to cut it anymore. In a competitive workplace that draws on talent from around the world, and the inevitable global shrinking of the North American definition of middle class, it is more important than ever to understand how to best use your money today to set your child up for a bright future. There are no guarantees of course, but these are all decisions that I have seen time and again positively position young people in life.
There Is No More Debate – Private vs Public
The first investment I would recommend won’t be popular with many people out there, and that is a private school education. I think I can say with some authority that at this point, on the world stage, the vast majority of North American schools simply cannot measure up. My authority stems from the fact that I teach in that public school system and am pursuing a master’s degree in education. Because of those experiences, I know that not only are we already pretty far behind private schools, but that I am absolutely positive that gap will continue to widen given our current focuses and the incredible lack of accountability in the entire system. I have written several articles on this topic, but suffice to say private schools have several very key advantages that easily outweigh and minor negatives of the experience. The sheer quality and quantity of valuable lifelong connections is one of most valuable of these advantages, in addition to the obvious educational superiority. There are some great teachers and great programs in the public sphere, but on average, there is absolutely no comparison from my point of view. If you can afford to send children to a private school from day one, do it!
Encourage Learning About In-Demand Subject Areas!
As someone who was always drawn to the humanities, as well as someone who tries to recommend certain career paths to today’s students, I can say that one of the most valuable gifts you can give a child is a fundamental understanding and hopefully appreciation of mathematics. I developed this a little later in life, and I wish I had a better grounding in it from a young age. The quickest route to a great job, and elite job security these days is to throw yourself into a STEM (Science Technology Engineering Math) career and never look back. Mathematics is quickly becoming a severe weakness for North America at a time when it is becoming essential to innovation on the world stage. Leverage your money into a charismatic math tutor that can not only explain mathematics, but truly help engage your child in it. These people are few and far between, and are well worth an hourly rate.
At some point after I have achieved my master’s degree and possibly slowed down on my internet entrepreneurial path I am going to attempt to learn Mandarin. While English is the language of business in the world today, skills in Mandarin will be an incredible asset to possess as more and more of the world’s economy hinges on a huge population of native Mandarin speakers. Learning to be semi-comfortable with the language will be the sort of edge that will earn someone a job or a promotion in the future. In addition to the math tutor, I would seriously think about a solid Mandarin tutor and/or enrolling in a Mandarin course if the instructor comes highly recommended. Now if could find a math tutor that is a native Mandarin speaker, now you’re really cooking!
To Pay or Not to Pay – That Is the Question
The subject of whether parents should help pay for post-secondary education has been beaten to death. Many people feel that an education to a top-notch institution is the best gift someone can give their child, whereas many other people smarter than myself believe that children should have to work their way through school and learn some perseverance skills that will benefit them later in life. I think that some balance between the two positions if probably best. With the quickly escalating costs of post-secondary education in North America I truly believe parents should help their children if they can at all afford it. That being said, there is no reason that students can’t work during the summer and/or part-time to gain some much needed experience in a variety of areas. Everyone’s financial situation is unique so I’ll leave it at that. One could argue that the sheer notoriety that an Ivy league degree bestows upon someone is worth the huge donations that some parents make to the schools in order to have their children accepted (*cough* George Bush *cough*), but there are so few parents that can afford that level of “investment” it is hardly worth discussing.
Building a Skill Set Through Valuable Experiences
If you have the means to be able to “float” your child as they take beneficial internships this could also be a great way to leverage today’s wealth for tomorrow’s gain. I’m not a big fan of the new fad of parents paying for their kids to go get drunk for 3-4 months in exotic locales such as Australia and Europe, or even an exchange to Germany. Often these trips are motivated less by the drive for experiences and more because it is a socially acceptable way to procrastinate “joining the real world”. I am not advocating for that at all. What I am saying is that in today’s ultra-competitive international environment, taking unpaid or lowly-paid internships at jobs that will teach you unique skills, and give you long-term advantage is a smart use of time and money. If you’re truly throwing yourself into a career you love and are passionate about, you shouldn’t need too much money anyway. If parents can use some system of incentives, trades, or interest-free loans to support their young-adult child as they build their toolbox of skills, experiences and connections, than I believe this is an incredibly valuable investment.
Becoming a Real Estate Tycoon
One other semi-unique idea I have seen financially-savvy parents use to help teach their children personal finance lessons is to help them buy their first piece of property as they are going to school or early on in their career. A house can be an asset if it is handled properly, and buy showing your child how to handle a semi-investment property they can learn a lot about real estate. The most common scenario I have seen is for parents to buy a house that has 3-4 bedrooms in it and is located fairly close to a post-secondary education route on good public transportation routes. The child then becomes the property manager for the parents and his buddies’ rent covers the mortgage. In the meantime, the house escalates in value (if its located near a campus it will almost never go down by much) and the child and his buddies learn how to maintain a house and/or get some practice doing renovations if they so choose. It can actually work out quite well if done properly, and could be an excellent way to develop a bit of a real estate portfolio (for many parents, helping their child out with living expense would be a sunk cost anyway).
Wealthy People Always Find Other Wealthy People
One of the ongoing themes that I am finding more and more important as I proceed through the jungle that is the modern job market, is that it really isn’t what you know, how good you are at your job, or even how hard you work. To a larger degree than I ever would have guessed (and I wasn’t blind before) it is usually about WHO you know. If you leverage your current financial resources into putting your child in advantageous situations where they can develop these all-important connections that would probably be the best leg up you could give them. Whether that means private school, a good university, or learning a new language, the importance of it cannot be overstated.
For any parents out there, have you invested in money in a similar fashion to some of my suggestions? What have you done differently?