"The Talk." You know the one. It has stressed out parents and mortified kids since time began. Our daughter isn't even old enough for "the talk"and I'm already stressed about it.
It’s uncomfortable. But we do it because it’s necessary.
Yet we don’t talk finances with our kids. Or with our parents. Why? There’s no way that a conversation about money can be more uncomfortable than “the talk.”
What do we lose by not talking about money?
When it comes to college, the answer is A LOT.
When we buy a home we get pre-approved before we start shopping. But with colleges we do the exact opposite. Doesn't it make more sense to put together a college budget and talk money with our kids ahead of time? If we don't, we risk waiting for our kids to apply and get accepted to their dream school before we discuss money. And then we run the risk of telling them it isn't in the budget.
“The Talk.” It isn’t just for kids. We need to have it with the grandparents too.
Checks grandparents write for tuition or withdrawals they make from 529 plans are considered student income. And up to 50% of this amount could count against the students eligibility for need-based aid.
The same is true for up to 20% of any money grandparents have saved in a custodial account for the student.
Be proactive. Don’t wait until you fill out the FAFSA your kids senior year to find this out.
It’s uncomfortable. It’ll cause anxiety. But having the “college talk” with kids and grandparents could save a lot of trouble down the road.