College finance: Teach your (grand)children well

I'm likely a few years off from grandparenthood, but I can't stop fretting over the downturn's lasting impact on college financing. One primary financing vehicle (piggybank, if you will) -- home equity loans and lines of credit -- ain't what they were mere months ago, as falling home values and rising rates braid a tight, Gordian knot.

There's more to it than money. For me, it's about legacy, too: the mark we leave behind on those we love, those we know and even on the bigger world out there. You start to ponder legacy more when you leave work, and think about what's next.

Grandparents are increasingly helping out with college financing. If tighter credit or other factors makes that harder to do, there may well be a perceived "legacy effect" -- a feeling that if I'm less able to help, I've somehow failed those I'm leaving behind.

One way to fight this feeling is getting in front of it, and doing whatever you can despite forces out of your control. I like the idea of instilling good saving behavior in young children -- whether that's our kids, or our grandkids. There are lifelong benefits that go far beyond education financing.

Financial guru Bambi Holzer wrote a great piece about this for At around age five, she says, children begin to understand how money works, making it a good time to start teaching them about saving. They'll start to catch on when, for example, they see how one week's allowance may not cover the cost of a coveted toy.

While it can be tough, not opening your wallet every time your grandchild says "I want that!" teaches a similar lesson. Let them discover, as you likely did growing up, that saving for what they want is not only fiscally responsible, but psychologically gratifying.

Holzer says that children who are aware of the high cost of college and who assume some responsibility for paying for it (if even the smallest portion), will assign more value to their education and get more out of it. Makes great sense to me.

Michael Burnham is CEO of My Next Phase, a consulting firm offering non-financial retirement planning products and services (

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