“My parents will pay for my children’s private school”
In recent years many young and up-and-coming professionals, those of whom are married and/or have children are discovering some of the challenges of living a moderate lifestyle – it is expensive! Whether it be having one child or multiple children, the expenses keep rising every year whether for household repairs, personal items, or to pay for the well-being of one’s child(ren). The expense of living anywhere in America can be somewhat relative. Nonetheless, from my experience working with clients of different wealth classes, one of the biggest expenses parents tend to complain about is private school tuition. Quite often this expense has been viewed as an alternative to birth control pills. In working with clients, to plan for their ability to afford private school tuition, unless there are additional funds available or more income coming into the household, very often we have a discussion about lessening expenses in parts of their cash flow in order to pay “the bill”.
There have been moments when I sit down with clients or a new couple, and in our discussions about paying for private school tuition, one spouse may say that their parents or in-laws will pay the cost of tuition. While admiring the generosity I wonder a few things:
- Has the couple actually spoken to the parents that will pay the tuition bill or is this a matter of assumption?
- Are the [grand]parents aware of the sacrifice being made to pay the tuition?
- Will this outlay of cash minimize or jeopardize the retirement plans the grandparent(s) had?
While we cannot predict the future yet knowing that if the couple in front of me were inevitably going to send their children to private school why not start planning for expenses like this when they got married. Quite often I have learned that many couples do not put any formal planning or savings strategy in place until way after the child is born, and by then it is too late. Many times, I have found myself having a discussion with a couple who perhaps want to send their 3 or 4-year old child to school the following year, while doing minimal planning, and expect that I may outline a comfortable plan for them.
In the instances when the grandparents have wholeheartedly and generously offered to pay the tuition costs, I typically coordinate a meeting with them and their children, the grandchildren’s parents. In the conversation, I have a discussion outlining many of the family governance matters that I prefer to be discussed openly so that it will not leave anyone with any regret. The reason is, that if one side of the family is paying such a heavy cost, I fear there might be some expressed regret in the event of any controversy amongst the family. As part of being a planner, the quantitative aspects of the work I do is a mere result of addressing the qualitative aspects. I am aware clients want to live a lifestyle they have been accustomed to or aspire to. How to get there may take time and discipline through systematic saving and investing. Nonetheless, if paying such an expense may result in family quantitative easing, then the importance of sustaining the qualitative aspects should be addressed very carefully.
Registered representative of and securities offered through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, member FINRA/SIPC, 600 Dresher Road, Horsham, PA 19044, (215) 957-7300. HTK does not accept time-sensitive or action-oriented messages delivered via e-mail, including authorization to “buy” or “sell” a security or instructions to conduct any other financial transaction. 2360944AL_APR21