According to a lot of people, we are spending the money of our children due to the deficits of the current government. This is indeed evident with the way we are collecting taxes and spending entitlements. What can you do to make the most out of these challenging times? Well, definitely, you should not just stand and do nothing about it. You should do something to make your children very rich so that they will be prepared for the tax increases and medical cutbacks that they will be experiencing in the future.
The first thing that you can do is to not overeducate your children. Some parents are investing for the master’s degree of their children. However, according to Laurence Kotlikoff, an economist who studies at Boston University, this may be a bad investment. While having an advanced degree gives your children high salaries, the costs for getting there is high too, because of the tuition, which is usually borrowed, and many lost earnings after a year or two, or more.
Kotlikoff even shared an illustration to show his point. He compared an Ohio doctor and a plumber from Ohio as well. Kotlikoff shows that the peak pay of a doctor will be 185,900 dollars, while a plumber’s peak pay, both from state wide averages, is 71, 700 dollars. However, this doctor had to spend 11 years of high school, spending a lot of money for tuition, income taxes, and interests from student loan. Over the adult life of a plumber, he will get 33,200 dollars a year of money spending, while the doctor gets 33,700 dollars, just a little more. Pursue academics if you love it, but not for the money.