Part 1: A Year of Lessons on Money Matters for Your Children & Grandchildren

I’m starting this series written for parents and grandparents because I have been hearing from them for over 2 decades about how much more difficult the world may be for their children financially. This is the 1st of 12 blogs offering lessons you can share with your children and grandchildren. I’ll be focused on money matters and general principles about building financial security over a lifetime.  What I hear the most is that clients just want their family’s future generations to be financially secure. Today that means bracing them for a world where there aren’t pensions and where social security will have changed to stay solvent. These are lessons many of our children are just not taught in school.

Lesson #1: It all starts with investing in you

Investing in yourself may seem simple, but it’s not easy to implement for everyone.  How do you invest in you as an 18 year old? Start by investing your time in an education. Investing a reasonable amount of your time and money into a college education will most likely provide the most financial security in a person’s life, not to mention fulfillment.  

Only about 30 percent of Americans have obtained an undergraduate degree or higher according to the U.S. Census Bureau. At the same time an estimated 90% of Center clients’ children and grandchildren obtain an undergraduate degree.  The ability to open opportunities and maintain a steady paycheck is fundamental for financial security. 

The Value of Paid vs. Unpaid Internships

Everyone needs to be able to open the employment door.  To open those doors faster, consider doing a paid internship.  This takes planning at the start of college because many students only have 4 years to line up an internship and some opportunities can be competitive, but as the graph below shows, they can really pay off:


Also acquire an education that is commensurate with your expected pay. Don’t overdo it and go hundreds of thousands of dollars into debt for a job with a salary that will leave you paying off your college loans for 10-20 years.  Figure out how to do it inexpensively.  There are many online tools, including this one from The Chronicle of Higher education that lets you compare earnings, monthly student loan payments, and graduation rates.

Lifetime Earnings Impact of a Degree

There is a lot of research showing that the increase in lifetime earnings, on average, exceeds the cost of an education for people who earn a college degree.  The U.S. Census Bureau reports that a bachelor’s could provide up to $1 million more income over a lifetime than a high school diploma. If you invest $100,000 in college and you make $1,000,000 more over your lifetime, your return on investment is 10 fold or 1,000%.  Over a 30-year period, this is an annual return of more than 10% per year.  Click here to see a list of ROI rankings for various universities.

If you’re a parent or grandparent, start the conversation early. Build college in as a given and develop a way for to pay for it (even if only partially). Setting the expectation that college is ahead lays a foundation for financial security in the future.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

The author’s opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or a loss. No investment strategy can guarantee success. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. C15-001739