How would you allocate limited resources among multiple kids

[SecondCor521]

Hi all,

Suppose you're in a situation where you have multiple kids and limited funds. How would you allocate those limited resources? The specific scenario I am looking at is $X in college funds and three kids whose out of pocket college funds might exceed $X. The money is invested such that any of $X can be spent on any of the three kids.

Some ideas I've rolled around in my head:

1. Fund each according to their need and make up the shortfall myself by
a. Going back to work
b. Dipping into my FIRE stash
c. Other
This doesn't particularly encourage them to economize.
2. Fund each according to their need, first come, first serve, until $X runs out. This penalizes the youngest kid by being unlucky in her birth order.
3. Fund each proportionately according to their need. If $Y is the total cost, then fund each kid $X/$Y. They make up the shortfall however they want.
4. Fund each equally: $X/3. They make up the shortfall however they want.
5. Mixture of the above.
6. Other.

Personally I'm leaning towards 4 followed by 1a/1b depending on what my stash looks like at the time, but I would like to hear others' thoughts.

What did/would you do, and why?

 

[Meadbh]

Why not have a family meeting and consult the kids? They might have some good ideas, and they would learn something about financial responsibility.

 

[jjquantz]

We told the kids that we would fund the equivalent of in-state tuition, room and board. If they chose to go somewhere that cost more, that was to be on their penny. DD#1 got a free ride and left with an undergrad degree and money in the back. DD#2 went to an out of state private school. She left school with the equivalent of a medium size car payment. She got some loan forgiveness by teaching in hard to staff schools and is now doing just fine. Just have an open discussion with your kids and let them know the ground rules well in advance.

 

[target2019]

Share equally. That's what we did.

 

[calmloki]

Kinda like inheritance. Everyone understands resources/recipients = equal shares. Trying to give more to the one who needs more and shorting the capable recipient can end up with bad feelings - the recipient of more can be insulted, the recipient of less has to deal with feeling shorted. I vote for simple and plain and not overthinking.

Parents try so hard - I'm kid free, so probably should be ignored. Good luck

 

[Ready]

I agree with the sentiments of sharing equally. My parents did not, and now I'm in the middle of a lawsuit over the issue. Don't put your kids through that.

 

[Gumby]

Maybe you could sell one for scientific experiments and use the proceeds to finance the other two? Choosing could be hard though - do you sell the one that will bring the best price or the one you like least? A real conundrum.

 

[SecondCor521]

Maybe you could sell one for scientific experiments and use the proceeds to finance the other two? Choosing could be hard though - do you sell the one that will bring the best price or the one you like least? A real conundrum.

Probably the one that weighs the most. I hear those experiments pay by the pound.

Thanks to the rest for the input!

 

[FlaGator]

Not in your shoes, but this is what I am doing:
1. Make them answer the question "how are you planning to support yourself when you graduate?" This is an ongoing discussion with the 10th grader when she starts in on Ivy League and other "name brand" schools. She's bought into the idea that $200K at Harvard to be an elementary school teacher is not a good idea

2. Tell them they have to graduate with no debt (my debt upon graduation was ~40% of my starting salary and took 10 yrs to pay off).

3. State schools are fine

4. Split the $$ equally. Anything else could result in resentment later, toward you or their siblings, or both. Maybe someone decides to be a plumber and needs a truck and tools. I view something like that the same as a college degree in terms of life outcome, as long as they are thoughtful about it.

5. Be clear on what you can contribute and what they need to cover through scholarships and/or work. Had the sit down with the 10th grader last fall to review pro forma budgets for state vs. prestige schools, and what we have set aside for her. Think it helped, but needs consistent reinforcement, especially the "how are you going to support yourself" question.


I don't expect a 16 year old to know how they will spend their working life. We'll spend the next 18 months getting exposure to different fields and help narrow it down. Won't be any $200K Art History degrees in my house

 

[fh2000]

Have your kids go to community college first. Then transfer to 4 year college. This will cost a lot less overall.

 

[Texas Proud]

I looked at what an in state U would cost and multiplied by 4... told DS that is all he will get... he is in a 5 year program so I said he needed to start taking out loans right now since he can get federal loans (but not interest forgiven)....

This is his first year and so far he is running just a tad under the 4 year budget... and that is with the loans... he is planning to move to a more expensive apt next year to cut down on commute times (15 minutes instead of 30 to 40).... he is aware that this will burn through his 'budget' quicker...


Also, I do allocate to him indirect costs that we have to pay... his health insurance and car insurance being the two that I charge now, and they are a good amount..... he gets the food DW gives him for free...

 

[FUEGO]

I'm going for Option 4 (fund each kid equally $X/3) followed by option 1b (dip into portfolio) if it seems necessary and we can afford it.

I only have around 2.5 years of in-state tuition saved up for each kid in dedicated 529s. But I have some more mentally set aside in my investment portfolio that's always been earmarked for "college costs". We plan on funding at least tuition and fees for 4 years. Not sure where $ for room and board and beer money will come from. If we're filthy rich 6 years from now when the oldest is heading off to college, we'll probably give them a full ride or close to it. If not, they might live at home, save big $$, and our savings will be plenty to cover most costs and they can get a job.

Of course all 3 kids of mine are pretty normal regular kids. They do very well at school (well, the 5 year old tested well in the one standardized test conducted on him ) and will likely qualify for scholarships. And they might have a year or two of college finished by the end of high school (they're on track for tons of AP courses and college math during high school just like their old man! Even at the same high school!).

 

[SecondCor521]

OP here.

The question I'm working on now isn't really about affording college per se, it's more about how to be balanced and fair with 4 people involved (me plus 3 kids). Especially since each kid is different and takes a different path and makes different choices out of varying combinations of need and want.

I think I am leaning more toward $X/3 with an adjustment for inflation. The way I would implement this in my particular case is I keep track of how much a semester of college at a public 4 year university costs (tuition, fees, room and board, books, getting there and back). As I spend down $X on them, I'm keeping a running tab of how many semesters they've used up. Then I'll just shift money around until it runs out and each has received 7.42 semester-equivalent of payments from $X, or whatever it turns out to be.

If there's more available in my stash at that point (which for reasons I won't go into here, there probably will be), then I can fund each further. If not, well, they at least got most of a college degree paid for, which is better than most get.

I'll have to work on my spreadsheet a little bit...

 

[RetireAge50]

I'm doing number 2 without the X.

Edit. I guess that is number 1. [emoji3]

 

[Starsky]

Community college is a great place to start a frugal college career, but some want to go right into the real thing. There are a lot of schools that shouldn't require massive debt, but the best schools that everyone wants to go to are not typically them.

If a more expensive school is in the plans, it's somewhat radical, but you could have your kids become independent and then they can apply for financial aid on their own. This is how it ended up for me, although I didn't really plan to do it that way.

They just need to file one year of their own taxes, not living as your dependent and then their financial aid requests will be based on their income, not yours. If you are worried about them applying later, they can even apply now for college, and request deferred entry for a year from schools that accept them. They can (re-)apply for financial aid later, after they file their own tax return. (A gap year is not a bad thing for college admissions. If they take a year off before school, they can always go to community college to get some core credits out of the way.)

Your kids should be offered a lot more financial aid this way, especially grant-based aid, and you can gift them the money you've saved for them later when it's time to pay off the student loans. (That's what my wonderful parents did because I saved them so much money.)

For me, working during that year was a great incentive for school and great experience for the work environment after graduation. I ended up working part-time at the same place for three of my four years in school as well, so I had spending money too. For grad school, I was able to write off all of my costs of my Master's Degree from my taxes, but that's another story...

 

[Blue Collar Guy]

fair doesnt mean equal

what about paying for A's 100 %, B's you pay 50 %, C's and D's they eat that. thats what i did . not all kids are college material, i like the post about state schools , can you foot the bill for all 3 in a state school ? I live in New York City non of us went to sleep away school, i dont know if thats feasible in other states. if so they stay home go to state school u pay for A's and B;s. Just my thoughts , hope i helped

 

[Fedup]

I didn't pay equally, one got more than the other kid. One got a study abroad in the summer and the other didn't. No problem so far.

 

[evilanne]

Both my sister and I stayed at home and went to local 4 year state university...I remember wanting to go away from home but I don't think it was an option. In retrospect, I'm glad I didn't as I had a friend that did and ended up on academic probation by the end of the 1st year and had student loans--in the end she transferred back here to finish her degree. Given today's prices, two year community college option for the basics would reduce the cost substantially and here they have agreements with the local state universities that guarantee credit transfer & acceptance at the state schools based on their criteria.

I'm sure each child is different so I agree with those encouraging you to set out the parameters in advance and allow them to make their own choice when the time comes but I believe your assistance should be equal or if it is not, let them weigh in on a more equitable solution based on each child's needs and goals.

 

[canuck5]

"Kids, I'm going to fund each of your educations by $1, for every $.25 you save/work/apply towards it, up to a maximum of $XX,XXX (plus a little inflation).

I believe that BobbieJo, you're first, so for every $.25 you put in, I will put in $1. BettyJo, you're 2 years younger, so I will put in $1.10 for every $.25 you put in. BillieJo, you're 4 years younger, so I will put in $1.20 for every $.25 you put in.

Here's the want ads so we can look at where you're going to help fund your education. If you choose to be a Doctor, outstanding, but we'll have to work on some grants, too. If you choose to be a plumber, you will still get my share, which will be applied towards a good vehicle, for your work, or establishing your first residence

Good luck kids, and if you have any questions about what FICA is, I will be here to help!".

 

[donheff]

I would fund them equally. My parents solved the dilemma by paying my older brother's and my tuition. When my younger brother dropped out and went to work after one year they ultimately even-steven'd by providing a generous down payment on a house. It cost $20K and is now worth $1M plus with minor improvements. Let the kids decide if they want to go to community colleges or incur debt but arm them with info about the consequences.

 

[travelover]

I say give it all to the eldest son. If he dies, then the next oldest son. Worked for centuries.

 

[Philliefan33]

OP, just a note-- what Starsky is suggesting is not likely to work. First of all, one cannot just file their own taxes to be considered "independent". To not be considered a dependent of you, your child would have to supply more than 50% of their own living expenses. Not many high school (none?) students can manage that.

Then, when it comes to financial aid, colleges consider the parents income and other resources until the student is married or age 26. Declaring "my kid is on their own, I'm not paying for college" is not the magic phrase to get them extra financial aid.

As to your question, I would give my financial support for higher education equally.

 

[ivinsfan]

As an exercise on paper this is interesting. However with multiple kids so many different scenarios are in play it's not possible to account for them all. It's definitely not one size fits all.
Even hardworking task oriented college age kids can push back at what feels like too much "managing" by parents. Part of being in college is making your own mistakes.
Things such as grade restrictions for money are a mistake IMO...We always told our 2 DD they were expected to take a full load of classes and have a plan to get done in 4 and then backed away. They were expected to have part-time jobs while in school.
If they asked for advise we gave it or they didn't we keep our mouths shut.

I would mentally split the amount by the number of kids, try to be helpful about selecting an affordable school, tell the student the bare bones of your funding plan. When they get to the basically slacker required schedule of senior year, tell them they can save themselves some money by doing some CC college classes or AP classes instead of taking 3 sections of study hall.

I've also learned from watching 2 of my nieces that you could keep a close eye on how your child seems to be adjusting in the first year of school. If they don't seem themselves, seem pressured, act oddly or just seem overwhelmed by the whole thing be ready to step in with some reassurance or perhaps some professional help. Two of my nieces who did well in HS just crashed and burned in the first year of school. So what you might be seeing as orneriness or not caring might be something else entirely.

 

[athena53]

My parents went for a modified version of #4 (I have 4 siblings). They told us that they'd pay for state schools and if we wanted anything fancier we had to find a way to fund the difference. We chose state schools! The exception was my youngest brother; Dad had changed jobs and they moved to Buffalo where my brother finished HS but he REALLY wanted to go to college in Ohio, our home state. Mom and Dad paid the out-of-state tuition. I think they also helped my sister with medical school when she started at age 30 after 3 kids and they were still scratching for money even though her husband was working multiple jobs.

Another thought: it really does depend partly on the kid and their aspirations. One friend, the father of 4, sent his oldest son to Boston College knowing he wanted a career in investment banking and had the smarts and the ambition to get there. The other 3 were daughters who wanted to be teachers and were interested in being full-time mothers when the time came. His plan was to send them to the local state school. He sounded a bit apologetic about being sexist but I understood. Likely future earnings is an important factor in how much is spent on your education unless resources are unlimited.

 

[Texas Proud]

I will give two examples that I have known over my years...

The first is when I was still in high school.... one of my friends was looking to go to college... parents said if she would agree, they would provide 100% of all expenses, but she would agree to fund her younger sisters college.... and then she would fund the youngest... never knew what happened as we did not see each other much after high school....


The other was when I was older... man was talking to his son... asked him if he wanted to go to college... son said yes... man shook his hand and said 'good luck'... I asked him about it and he said he joined the Navy to get an education and if that was good enough for him it was good enough for his son...