Teaching rich kids valuable financial lessons.
College isn’t cheap, but a recent Bank of America study notes that approximately half of children in families where income levels are $250,000 or more — what President Obama calls the rich — are not or will not pick up the entire tab. [1]
Instead, such families are looking at higher education as a “teachable moment” for their progeny and are expecting these students to contribute at least something toward their education. The study comes from the latest Bank of America Merrill Lynch Affluent Insights Survey, which is conducted semi-annually to gauge the financial thinking of wealthy Americans.
Shared Responsibility
Wealthy parents, some 47 percent of those surveyed, confirmed that college will be a shared responsibility for parents and their children. Of these, some 29 percent look at this as a way to teach their children financial responsibility. Others expressed concern over their own retirement portfolios and the need to bolster these before retiring. Some parents are putting their children through college while looking after aged parents and are part of the “sandwich generation” that is feeling financial pressure from the generations preceding and following their own.
Continued high rates of unemployment, pegged at 9.1 percent for July 2011, is also a point of concern even for wealthy families. Some people are currently between jobs, others have accepted lower paying positions while still others have seen bonuses and other perks disappear. It has been nearly three years since the great stock market sell off and with the recent downturn following the debt crisis, talk of a double-dip recession has stirred anew.
Parental Priorities
Notably, “financial know how” is the the most important lesson wealthy parents want to impart to their children today, with 48 percent placing this trait first. Second, at 36 percent,, was finding the right spouse followed by 24 percent who emphasized “choosing the right career.” [2]
Such parents expect to use certain milestones to help their children learn financial lessons including paying for college, graduating from high school or college, choosing a job, buying a car, buying a home and wedding planning. And, some 53 percent plan to discuss their own retirement planning to help their children learn important financial lessons.
References
[2] Financial Advisor: Retirement Concerns Grow Over the Past Six Months; Jim McConville, Aug. 8, 2011
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