Help your children save for college

OK I have to give credit for this idea to my Brother-In-Law (we will call him Mark).  I took a different approach to saving for college for my son.  In our case simply set up a 529 plan for our son, made contributions as part of our financial plan and he is now in college and can do four years (including housing) as a state college with no debt and almost on out of pocket expense.  While this seems wonderful a bit of it is already biting us in the rear.  Our boy just doesn’t seem to realize how lucky that makes him.  I am glad we did it but what I am about to lay out for you is a much better solution at least to a degree.

What Mark has been doing since both children were born is both simple, cost free and may I say genius.

Every kid has birthdays, Christmases, Easters and many other times that relatives, friends etc send them cards and gifts and very often money.  Mark has required that 50% of his two children’s financial gifts (no matter how small or large) go into savings accounts to be used for college.   He choose very safe investments and did not elect to use a 529 due to its restrictions.

What does this mean to his kids?  Upon Graduation both will have over 20,000 dollars in funding toward schooling or life in general if they choose not to go to conventional college.   I should point out that this is not a family the gets huge amounts of money for each event, we are talking 20 bucks here, 5 bucks there, may be 50-100 for a Christmas that goes into these funds.  Mark requires his kids to save this money no matter the source.  If they come over to my house and I give them a ten a piece for spending money, Dad puts 5 bucks a piece away, just like clockwork.  The fact that 18-20 years is a very long time for money to grow, takes care of the rest.

Some of the family thinks this is “taking away the fun of just being a kid”, most of our family is BROKE by the way!  Taking advice from the broke is a good way to not only be broke but build generations of kids and grandkids that are broke too.  Mark wisely has ignored this and I think when his kiddos go to college or start a business or do what ever with their money as adults they will put more value on the funds.

Now we did teach our son to save, we helped him invest in stocks, set up accounts and always made him put some money away.  Yet if I had it to do over I would have also had some allocation go to his college fund directly from his hands.  Not just to increase the funds available but to give him a true sense of ownership, responsibility and gratitude for the fact that this money is available.

What I know is this my niece and nehpiew will have real options when they finish high school.  Options my brother-in-law would be hard pressed to provide on their household income.  All this from the simple wisdom of “pay yourself first”.  Consider it the next time your little ones get a card from Grandpa Joe or Aunt Betty.  A few less do-dads today for a real kick start to life tomorrow.

Filed under Business & Marketing | Comment (0)

My Heros in Business and Investing

If you really want to be successful financially you have to follow the intuitive wisdom of the 12 year old that plays Pop Warner Football. That 12 year old sees himself as Bret Farve or Randy Moss or whoever his favorite player is when he takes the field. In his head he hears the crowd and when he makes the catch, tackle or completes a pass for a second he is that superstar.

When you want to build wealth and success you need to do the same thing. You need your own heroes to follow and model yourself after. Here are some of mine and why I follow their lead.

Donald Trump - I admire Donald Trump for a large number of reasons. His success as an entrepreneur and real estate investor of course speaks for itself. On the personal side, Trump often comes across as a real jerk but that is just who he is. Believe it or not I admire that as well, despite being in the public eye he does not try to make the public happy. He is who he is and if you don’t like it, tough! I respect that a great deal.

Trump is also completely honest with people (this is a big part of why he is considered a jerk) about the way he sees things. I never have felt that Trump is someone with a hidden political agenda, he is a patriot, a success and a tough business person with a world class team around him. Trump has also put great deal of effort into establishing educational programs for real estate investing and other financial education programs.

Richard Branson - Branson is a real entrepreneur and has a life envied by many but experienced by very few. Despite being amoung the richest people in the world though he is remarkably down to earth and even reasonably accessible. When you hear him interviewed you think he could just be a bit of an eccentric British guy that lived next door to you.

He owns Necker Island where he maintains his primary residence which was recently featured as the number one celebrity home ahead of Hugh Hefner and Bill Gates! Yet if you met him in a bar tomorrow he would sit down and have a beer or three with you. He has failed more times then he has succeeded in building companies yet he keeps doing it because he loves being a true entrepreneur.

Warren Buffett - Warren began working in his fathers broakrage firm at the age of 11 and never looked back. Known as “America’s most successful investor” I can’t help but admire him. Buffett employed a three pronged approach

• Generals: undervalued securities that possess margin of safety and meet expected return-to-risk characteristics
• Arbitrages: company events that are not related to broader market changes, such as mergers and acquisitions, liquidation, etc.
• Controls: build sizable holdings, ally with other shareholders or employ proxies to effect changes in companies

This approach has made him one of the richest men in the world but was actually a very “safe approach” to investing.

Jimmy Buffett - No not Warren’s brother and that is no typo either. I am talking about party hardy, parrot head, Margaritaville singing Jimmy Buffett from Mobile Alabama. Jimmy speaks to my fun side, the part of me that takes 15 days off, lays on a beach and just lets everyone else deal with my businesses two times a year. He is my “someday” archetype. The old man I want to be when all my battles have been fought and I fish on the beach and drink rum from a coconut.

There is more to Jimmy though, Mr Jim is rich my friends, very, very rich! He has worked branding magic around the “Margaritaville” theme and now owns bars, merchandising and a premium Tequila label. At the same time he has only done what he loved doing. When he first went to Nashville he was rejected by 18 consecutive record label executives, so he kept playing bars and clubs and being who he was.

The rest is history and now despite not having a top ten record in two decades he still sells out just about every show he does and his fans still want more. There are Buffett fans (Parrot Heads) from 8 - 80 and their numbers continue to grow. Why, Jimmy created an image, a brand and did so by being himself. To me that makes him a very successful business person.

Henry Ford - Henry could never have gotten into college even with a bribe, he did not have the grades, the desire or the “book smarts” for it. Yet he is more associated with the automobile then any of the people that actually invented it. Henry took automation to the extreme and made the assembly line a reality and brought the car to the average American. That one achievement may have had more influence on the wealth and growth of the United States then any other person from his era.

Not content to just make cars though, Henry was a master of efficiency. When suppliers bid on supplying him with engines he required the crates they came in to be made to specific specifications. Wanting his business his suppliers agreed, the crates were then disassembled by his workers and formed the floor boards of the Model T. Despite that he had massive amounts of scrap wood from all the shipping crates so he teamed up with E. G. Kingsford, who was a local real-estate agent, to buy land for a massive wood production and charcoal processing plant. With all the waste in government and business today we could use some guys like Ford around.

So those are my heroes in business! I have others but those are my big ones when it comes to money, building businesses and investing. I suggest you assemble your own heroes list. Be inspired by them, know their stories and utilize that creative visualization children do so well in back yards and school stadiums to reach further then you can on your own.

Filed under Wealth & Investing | Comment (0)