Maybe we're crazy parents, but we think our 22-month old daughter has serious talent in dance, music and drama. She's so advanced that she's like Wayne Gretzky when he dominated 10 year old kids as a 6 year old playing ice hockey! (Ok, I might be exaggerating now...) But we're actually researching the application process of highly ranked schools, such as The Juilliard School...16 years in advance! Aside from its 5% (!?!) acceptance rate, the other eye-popping number about Juilliard is its tuition...
Legendary investor Warren Buffet once said: "My wealth has come from a combination of living in America, some lucky genes, and compound interest." Mr. Buffet is right about compound interest being a significant factor to his wealth. It is beneficial for investors and savers; however, it has the opposite effect when calculating future cost!
Tuition (not including housing and supplies) at Juilliard for the 2019/2020 academic school year is $47,370 USD. Using the compound interest formula and assuming that tuition increases by 5% per year, the total tuition for a 4 year degree for a graduate in the Class of 2040 is $445,700 USD. As of the publishing date of this blog, that equals to $621,000 CAD. The numbers are astronomical! (Of course these are just projections...)
Aside from parents investing in RESPs and the US 529 Plan (education savings plans for Canadian and American parents respectively), children can be involved in the planning too. In order for parents to provide a strong foundation in money management and financial literacy for their children, it is important to utilize appropriate and effective resources. Check out these great tips from the Canadian Foundation for Economic Education. It contemplates that during these anxious times of COVID-19, it's a good time to talk with your kids about money. Some topics of conversation include talking about your job, saving for the future and the importance of helping others, etc.
During these difficult times and while homeschooling your kids, it's a good opportunity to talk to them about money. Anyway, chat with you all next time, I'm going to call Juilliard about scholarships...