Crippled CEO Blog #080:
I don’t think you should be putting money away for your kids to go to college.
I know. This is sacrilege. Every good parent, after they pay for the necessities of survival, are obligated to put some of the remainder into the college fund for the kiddo.
And maybe this was a good idea 30 years ago.
The reality today, though, is that unless your kid wants to be a doctor, engineer, scientist, educator, or lawyer, traditional college likely isn’t the best course.
It is also egregiously overpriced.
Of all of the degrees that are a waste of money, I am particularly annoyed by one of the most popular ones: business.
Spending $100k to get an MBA is dumb.
I’m a high school drop out. After a decade of running my own businesses, I had this insecurity that there was some secret knowledge in a business degree that I was missing out on. I decided to start taking online classes at a university. The only problem is that I kept leaving my books in shrink wrap on my desk at my office. I wasn’t reading any of the material. I wasn’t paying attention to the lectures, only logging in to make attendance. And after a year, I was consistently getting perfect scores in every quiz and test.
Apparently, actually running businesses also teaches you the material. Go figure.
And instead of paying six figures to get this information, I made money while I learned it.
Definitely do set some money aside, preferably in an investment account that compounds, to give your kid a head start — just don’t pigeon hole what it can be used for by calling it a college fund.
If your kid wants to go into business, instead of spending it on college, let her use the money to start two or three different businesses over the course of five years or so. Even if they fail completely, she still got the education. She can then use that knowledge and experience on the next thing that she does. Just like college. But there’s an excellent chance that one of them doesn’t fail, and now your education fund is a successful investment.
If your kid wants to be a writer, an artist, a photographer, a filmmaker, or any other creator, instead of going to college for this, she can use that money to live while she spends a year or two writing/creating full-time, honing her craft while educating herself online. If she wants, she can hire specialized coaches/instructors to help her advance.
Learning how to run a business or getting better at a craft, like writing, requires actually doing it. You can read about doing sit ups all day, but you don’t get anything out of it until you actually do them. Giving your kid money to get the actual experience is going to be more beneficial. I promise.
Or, for another option entirely, you and your kid can decide to let the head start fund continue growing and compounding while they forge their own career path without any additional financial support. If you put $200 a month into an investment fund, and that investment earns a very reasonable 8% a year, your child will have $1,061,940.70 when they turn 45. Almost $1.6 million when they turn 50. Working an average job that pays the bills for a couple decades and then cashing out over $1 million at 45 and then deciding what to do from there is not a bad plan. Plenty of people end up doing that on accident, but without the $1 million payday in their 40s. This also seems like a better alternative to getting a degree you might not use.
The world is evolving rapidly. Many of the jobs your kids will have in 18 years don’t exist right now. It’s impossible to predict what role universities will play in the future. Give your kids the best kind of help that fits them specifically, not what society necessarily expects. Maybe that means going to college, but there’s a good chance that it doesn’t.
(I didn’t have to go to college to learn a bunch of things from your mom. One thing she did not need to teach me, though, was how to make sure I never miss the latest blog post. Send a text to 484848 with the word CRIP as the message and I will send you out a link to the latest one every Sunday.)
Be First to Comment