By: Jon Neal Selzer, LUTCF
I have the most thought-provoking and interesting conversations with my clients. I often say that over the years, I have likely learned more from them than from any book, class or seminar that I could attend.
A recent talk with a long-term client and friend concerned paying for his grandchildren’s college tuition and other expenses. This gentleman and his wife worked together for many years to build a family business and have been quite successful. They are comfortably retired and know that they have more assets than they will ever need to spend. They are healthy and are in a wonderful position for their retirement years.
The question came up as to whether they “should” pay their grandchildren’s college costs. They have more than enough assets to do so comfortably, and this would ensure that the kids could focus on studies and emerge with a four-year degree debt-free. The dilemma came from knowing that they could take care of these costs – and wondering whether they should do it.
Many times when we think we’re talking about money, we’re not really talking about money. I know that sounds silly, but please hear me out. “Money” can be a very emotional topic and it symbolizes many different things to every individual. Money can represent freedom – freedom from debt, freedom to choose how to spend your time, and for some the freedom to help others. Money can be a tool – we use it to purchase the things we need to live, and to provide for our families.
The way we spend our money can express what is important to us, and our values. Many people equate money with status and position in society. Having (or not having) money can determine the limits of what we are able to provide for ourselves and our families.
In this instance, spending a portion of their assets on their grandchildren’s education would express how important they consider a college-education to be, and the priority that they place on taking care of their family. It would be a wonderful gift for the grandchildren to receive, and they in turn would feel the gratification of being able to provide for their education.
The other side of the discussion concerned how the grandparents felt about simply giving the funds away. While it would be a generous gift, the question arose as to whether the children would be appreciative – we were certain that they would be grateful for the gift of their education, but would they be able to comprehend the time and energy and pure hard work that went into earning and saving this money. In addition, would they value their education as much if it was just given to them, versus them having some “skin in the game” to pay for their education costs?
That is an interesting question: “What value do we place on something that is given to us for free, without any labor or effort on our part?” I have gone to seminars that are offered for “free,” with very few people in attendance; however, if there is a nominal charge of say, $10 – the room is often full. Equally important, when someone is hosting a “free” seminar, they often will experience many-shows and cancellations. If there was a fee to attend, it is more likely folks will go. Do we place more value on something we have to pay for?
The root of the question seemed to be how to teach children the “value of a dollar” – again, not so much about the money itself, but the values we hold regarding what it stands for. We did not come to any definite conclusions during that conversation, or during subsequent discussions we had on the same topic. What eventually happened is that an equal amount was contributed to each grandchild’s education account, with the remainder of costs to be paid through scholarships, part-time jobs, and student loans. It seemed a reasonable solution to a multi-layered question about “money.”
Article written by: Jon Neal Selzer, LUTCF/ Owner of Marathon Financial Advisors, Inc.
Securities and investment advice offered through CADARET, GRANT & CO., INC. Member FINRA/SIPC
Marathon Financial Advisors, Inc. and Cadaret, Grant & Co., Inc. are separate entities.