How to Raise Money Smart Kids

by Neal Frankle, CFP ®

money smart kids

I don’t get teary-eyed too often but when I see a young person really put it together financially, my tears of joy flow.

Here is an e-mail I received from David. He’s a young man who wanted to go to an pricey college but didn’t. His parents played hard ball with him and, miraculously, he’s doing fine. Despite going to a local college, he came out of it without a rap sheet or doing time in the “Big House.”

In light of the conversations we’ve been having about parents breaking their backs and banks sending kids to foo foo colleges, I thought you’d like to hear what he has to say:


I am a very lucky person. My parents taught me the value of money and work. I am blessed in many ways, my parents paid for my undergraduate education at an in-state school (New Mexico State Univ). I wanted to go to a neat out of state school like Arizona State Univ or UCLA but my parents told me unless I could get a scholarship they wouldn’t pay for it even though they could.

I was not the best student and I didn’t want to have student loans so I went the in-state route. The deal was, they would pay for my tuition and room and board equivalent to the dorms. Any money I wanted for fun, spring break, etc. was on me, no beer allowance from Mommy and Daddy. 

I worked full time each summer, lived at home and saved for the next year. I also worked part time during college on campus. I had exciting, high profile jobs in school, I stocked books in the library, worked for the physical plant helping the plumbers doing minor repairs and also worked for the special events center helping the roadies set up the stage and seats, etc. for concerts and other special events, all for minimum wage between 10 and 20 hours per week.

This was all in the early 80’s and minimum wage was $3.35 per hour (big bucks). I didn’t have a car until I was a senior, I rode my bicycle everywhere. I had plenty of business ideas but no way to implement them. Many times I was working when my friends were chasing girls and having fun. Somehow though, I found that I had plenty of time to have fun and still get through school. Never was too cool with the girls but I guess that is another story. I have no complaints, I just lived frugally and below my means and the standard some of my friends had.

Once I finished my undergrad degree I worked for a couple of years before I went back for my MBA. My parents said congratulations, good luck, we support your decision but this is 100% financially on you. I took a tuition loan and started at an out of state college for my first semester.

I transferred back in-state the next semester because it was too expensive out of state. I paid as much tuition for the one semester of out of state tuition as I did for the remaining 3 semesters in state. I lived the same way, I shared a house with roommates, drove my car as little as possible and just lived frugally. I got my MBA in the fall of 1990 with $5,000 in student loans, by 1993 I had paid them off.

I didn’t want the debt so I made more than the minimum payment and sacrificed some things. In New Mexico, MBAs don’t make tons of money. I made about $30 grand a year in the early 90’s and it wasn’t until 1999 that I made over $40k per year. I am 45 now, relocated to North Carolina and make a little over $90k so I guess I have caught up. I have no complaints, I know I am luckier and more fortunate than most people.

I never felt cheated or that I was somehow living below the standard of living that I was owed while I was in school. I still try to live frugally and below my means. 

I wish I had more sympathy for people facing college now. I completely understand that college is much more expensive now than it was in the 80’s but it is still doable without putting parents or the kids into massive debt.

Med school and maybe law school are different but the income potential is pretty good. I see friends and co-workers sending their children to school now. Most seem like they can’t stand to see their kids not driving a good car and living in their own apartment and taking the nice spring break trips. They then complain how expensive it all is. Sorry, there is another way to accomplish this and not be in debt till you are 40..

Are you crying too? David makes the point better than I can. When parents behave in a financially responsible way, it’s the best way to teach children about money. David got a lot more than just an MBA in college…didn’t he?




Subscribe & Get Your Free E-Book and E-Course as My Gift to You!

Investing Your Money Made SimpleOnce a week you'll get unique tips to make smarter money decisions about your investments, retirement, taxes, and career. You'll also get encouragement and ideas to help you get out of debt, earn more money, and generally stop worrying about your money.

Neal Frankle is a Certified Financial Planner™ with over 25 years experience. Subscribe today and tap into this wonderful, free resource!

Become a Fan! Follow @NealFrankle

{ 3 comments… read them below or add one }

Neal May 21, 2009 at 7:42 PM

SJ, Good point. Yes, his folks did pay for his college but they did so consciously and bought the best product for the least cost. I don’t have a problem with that….


You are so right. I was amazed when my daughter got accepted to the same state college I attended and I saw it would cost up to $18,000!

It’s amazing and terrifying – especially for folks with lower financial means. You make excellent and important points. Thanks!


Jocelyn May 21, 2009 at 4:48 PM

A couple things to note – the cost of school, even at state schools, has been rising faster than inflation for quite some time now. Between that and the rising cost of textbooks, meeting the bare minimum of books, housing, and tuition, is a more expensive proposition.

For students who come from less economically comfortable backgrounds, even state schools can be out of reach because of cost or because families may depend on students to contribute to the family income.

Lastly, for students who want to pursue public service and not an MBA, the earning potential is simply lower. School is generally a more expensive investment now.


SJ May 21, 2009 at 8:32 AM

I will point out that his parents did pay for his entire ugrad (essentially…) And ignoring the hit his parents took in their savings etc.

I say this while noting my parents did contribute much to my ugrad; 2 years tuition/room/board + 1.5 yrs tuition. (For an in-state awesome public school of course…)

I’ll take this back if he saved up the money in HS or what not =)


Leave a Comment

Previous post:

Next post: