Financial (and Emotional) Lessons from Dropping My Daughter Off at College for the First Time
Opening a 529 plan early and contributing often helped ease the financial burden of my child's education and let me focus on the difficulty of sending her off.
It seems like I blinked, and our oldest child, Abby, went from being a newborn to a college student. It was three years ago, but I still can't believe this major family milestone has come and gone, and let me tell you, it's been a whirlwind of emotions.
As we got Abby settled in on her first move-in day, I couldn't help but notice that there were basically two kinds of parents on campus: those who looked extremely stressed and frazzled, and those who looked contented and happy. Everyone's a little emotional, of course, but this clear distinction between parents got me thinking about the importance of preparation for the big day.
What can you do to make sure that your child's transition into college is as comfortable and relaxed as possible, not only emotionally, but financially, as well?
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Get Started Ahead of Time
Packing for a dorm room may seem like a major undertaking, but the list of things to bring is pretty predictable. The school will provide a list of things your child will probably need, but I suggest starting your own customized list months in advance so that every time you think of something (clips for the potato chip bag, cable wire for the TV, a shoe tree to hang in the closet, etc.), you can add it on. Also, set a shopping and packing deadline: Ours was three days before move-in day, and it was one of the best ideas we've ever had (full credit for it goes to my wife Sally, the real architect of the plan).
The same concept works for financial preparation. Start a 529 savings plan as early as possible, and be systematic and conscientious about contributing to it. It's just like making the shopping list ahead of time. I can't tell you what a relief it's been to know that we have resources set aside for Abby's education. Even though it's money we've saved over the years, it feels like a scholarship, and the tax-free growth was the best part of all.
What's a 529 plan? It's a tax-advantaged college savings vehicle sponsored by a state, agency or educational institution. While you don't get federal income tax breaks on contributions, any distributions for higher education are federal tax-free, and many states give additional tax breaks for participants. These plans are really the best way to go when it comes to setting money aside for college and enjoying tax-free growth, but be sure to speak to your financial adviser for all the pros and cons. (Go to Saving For College for more information about different 529 plans and how to set one up, and take a look at my recent article on the subject.)
Remember Your Basic Tools
If I had known how many people would forget basic tools such as a screwdriver, pliers and a box-knife, I would have opened a kiosk in the parking lot. Having the right tools for the job is an age-old piece of wisdom, but it can be far too easy to forget.
The same goes for having the right tools to pay for college. I've said it before, and I'll say it a hundred times: Start early and contribute often to your 529 plan. Ask any parent who has done it, and they'll tell you that simply getting the ball rolling on college savings brings enormous peace of mind later on.
Preparation is more than savings, though. Help give your child the tools to cope with being on their own by explaining concepts such as budgeting, banking and organization. We all know they'll roll their eyes at our lectures, but they need to hear them! The more they know ahead of time, the less there is to learn—because there is a lot to learn no matter what. In those first days, your child is thinking about everything from where to keep her toiletries and how the meal-plan works, to meeting new friends and learning where her classrooms are. Help reduce stress by sending your child to school with basic and important personal finance skills.
Take the Lead
On move-in day, the stressed parents invariably had stressed kids. So, manage your emotions and take the lead. Think of yourself as an exemplary Chairman of the Board, providing a good example and giving guidance and advice—but letting your child take the role of CEO. Staying calm and focused can help mitigate a lot of stress.
Once again, the same should go for college savings. Start as early as possible and make it a point to take the lead in your child's education. Staying calm and focusing on your financial goal while you're investing will lower your stress levels, so you can properly guide him or her into the next chapter of life.
Stay in the Picture Without Hovering
It's so hard to come home from dropping your child off… and knowing she's not there. But we made it a point not to place our own emotions on our daughter, who had enough on her plate as she started a new life at school. Instead, we reminded her that we'd always be there for her, but that we're confident in her ability to take on this transition.
Letting her go and restraining ourselves from holding her too close is hard to exercise. From the beginning, you want to protect your wobbly toddler from painful falls, insulate your middle-schooler from tricky social situations and, if you're like me, you might have to fight the urge to lock your teenager in the house. But your child has to experience life on her own: All you can do is focus on giving her the tools and confidence to cope with different situations and hope for the best.
See the original version of this article at www.blog.brad.pine.com.
Bradford Pine is a wealth adviser and president of the Garden City, NY-based Bradford Pine Wealth Group. He assists individuals to create wealth, simplify their lives and plan for retirement.
Anna B. Wroblewska contributed to this article.
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