This conversation can be a great opportunity to teach your child more about finances—and your family valuesShare

It is a truth, universally acknowledged, that the minds of parents will turn to educating their children.

“Regardless of wealth level, in some form or fashion the discussion on how or whether to fund education always comes up,” says Marc E. Seaverson, a Florida-based Wealth Strategist with the Private Bank. 

Yet while most parents have baked-in expectations about education and funding, many parents find discussing costs with children to be uncomfortable, even taboo. 

“Historically, parents have saved or paid directly, and children have little knowledge of what the expenses are and the strategies employed to get there,” says Victoria F. Bolton, a Wealth Advisor in our Greenwich office. 

But that has been changing, our advisors say. “I am seeing a lot more clients wanting their children to be aware, even to have skin in the game,” says Bolton, “and that creates a real opportunity” to teach children about key financial issues as well as your family’s priorities.   

First step, though, is for the parents to be clear about their intentions. So, what do you want to do?  

• Pay for a whole ride from pre-K through Ph.D.?
• Pay tuition costs, but ask your children to contribute to their living expenses? 
• Have your children take out loans for college? For graduate school?  
• Pay for college, but expect the children to be self-supporting immediately after college?
• Subsidize their lifestyles for some period of time? Forever more? 

Any choice is fine, experts say, and your J.P. Morgan advisor can help you develop and implement whatever approach suits your family best—whether it is simply making your children aware of costs or having them contribute to some degree. 

The important part is the second step: making sure your children understand your expectations and the consequences of their choices. Parents can help with perspective, pointing out, for example, how much an average English major makes after college versus a business major, and then discussing what that means for, say, rent in a costly urban center. 

While every family will need to have a different conversation, our advisors agree on some common principles to guide discussions, namely:

1. Share expectations—and help prepare your children to meet them.

As a Wealth Strategist based in our Dallas office, Amanda Lott sees a lot of parents who are entrepreneurs and self-made business people and who are clear that they want their kids to be self-sufficient someday.

That’s great, she says, but children don’t wake up one morning suddenly knowing how to manage a budget or save for the long term. The sooner you start teaching them this financial capability, the better.

“Paying for college is a big expense. Understanding that, we encourage clients to begin talking to their children about the importance of saving from a very early age,” Lott says. If you are looking for more concrete advice, ask your J.P. Morgan advisor for a copy of our guide Teaching children about wealth; it offers detailed age-appropriate activities, from piggy banks to investment accounts. 

Even if you can start teaching children as young as three years old how to save, that clearly doesn’t mean you should discuss long-term plans right away. Timing is important. Many advisors counsel waiting until the beginning of high school to start having conversations about the financing of children’s secondary education. That’s when they are generally developmentally mature enough to think long-range; it’s also when their awareness and desire for college will be taking shape.  

2. Discuss education costs in context.

Here are just the bare facts: College in the United States is already expensive, and tuition is growing at 6% a year, which is faster than inflation. Common estimates put the average cost for a public university in the United States, including tuition, room and board, and others fees, at just over $21,000 a year, says Seaverson.

U.S. private school is just under $49,000 per year. At today’s growth rate, a baby born today could be expected to pay north of half a million for a private college. 

Keep in mind that these are averages. The costs for some private universities can be tens of thousands more per year. 

“When children start to look at colleges and maybe say ‘Here is where I want to go,’ that is an amazing opportunity to start talking,” says Seaverson. “When students are gathering routine information, such as how many students go to a college or what degrees do they offer, they also can be encouraged to ask how much does it cost and how do those costs break down.”

3. Decide whether you want to offer guidelines or rules.

There are many ways parents can enforce their vision. Some parents may want to require their college-age children to report on grades and possibly to achieve a certain GPA to continue to receive full funding of their education. Others may require that a child major in something that creates higher likelihoods of post-university employment, such as engineering.

Yet, our advisors suggest that parents think twice before being overly prescriptive.

“Very rarely do I see it play out well when parents give iron-clad mandates to their young adult children,” warns Amanda Lott. “It is important that an adult child feel a sense of autonomy. Better is when parents make sure the children understand that their choices do have ramifications and consequences—both good and bad.”

4. Discuss the bigger picture.

In the end, say our advisors, the conversation around education is really about reinforcing your family values with your children.  

Tuition can be an easy way for parents to start talking to their children about what it takes financially to live as they do. Seaverson says: “Think of it as a great opportunity to build a collaborative communication about expectations and values that can spill over into other areas like philanthropy and lifestyle.”

We can help

Your J.P. Morgan advisor can help you assess your education funding options and offer insights into how to frame a goals-based conversation with your child.