US Finance Blog

When you have loved ones that need money and you are in a position to be able to help them out then it can be tempting to do everything you can to help them. If you have grandchildren and their parents cannot help them out and they need money it is tempting to do what you can to help them. When you love someone, you want to do everything that you can to help them but sometimes doing too much can actually cause problems later. Lending money can come into this category and it can potentially cause other problems as well. It is therefore worth giving the situation a lot of thought.

Life lessons

By giving money to your grandchildren they may not learn about how to manage financially on their own. Obviously small gifts perhaps on birthdays or during the holidays are rather nice to give, but when they need larger amounts of money then this is different. If they are in debt and need help, want to go to college and need funds, want to buy a car or need a deposit for a home, then if you can help them, it can be really tempting to do so. This is likely to make you feel really good knowing that you have helped them out and hopefully they will be very grateful for it. However, it could cause problems.

If they get financial help, they may not learn about coping financially on their own. They might think that if they need money again, they will just be able to ask you for it. They may even not worry about how much they are spending because they know that they can get a loan to help them out when they need it. It could therefore lead to them being reckless with their money. They may not then learn about the values of saving or about when to choose a loan and how to borrow sensibly.

It can feel very hard to not help out like this but if you do so it may mean that they get so reliant on it that they form really bad habits. Then when you are no longer able to help, they could really struggle to cope. The may end up in a lot of debt as a result and it could mean that they will be even worse off than they would have been if they had not had the help in the first place.  

Relationships with others

It could also create problems with other grandchildren or children. If you only give money to one of them, then how will the others feel? They may feel that they should have the same amount of money and even if you do give money to all of them the parents may feel it is unfair. It is unlikely that all of you children have the same number of children. This means that you may be giving money to three grandchildren belonging to one child and only one child belonging to another. This means that the children may be jealous of each other as one family has had three times the amount of money compared to another. If the money had gone to the children it would have been split evenly but going to grandchildren means that it is not.

There may even be jealousy from other family members who may feel that they should have benefitted as well. It is worth giving this some thought before you give away any money. You may try to keep it secret to prevent this sort of thing, but it can be really difficult to keep secrets and even if you do not tell anyone, there may be others that know about it that will.

Problems for yourself

You may also create problems for yourself if you need to have some money and you have given it away. Make sure that you have kept enough. It can be hard to think that you will need money, but you never know. It might be that you need health care or nursing care and your insurance may not cover it. You may wish to go into a care home and this could cost a significant amount of money and if you do not have any money then you may not be able to go to the place that you want to go to.

So, it is well worth thinking hard about what you should be doing with regards to giving away money. It can naturally feel like the very best idea in the world but when it comes down to it, it can actually cause more problems than it solves. Therefore, you will need to think carefully about the impact that it will have on your grandchild and your family as well as whether you will need the money.

If you are considering going to college, then it may be that you will need to get a student loan in order to do so. This could be something that may or may not worry you. It is worth thinking hard before getting any type of loan as there could be consequences for you in later life.

Advantages of a student loan

If you cannot afford to go to college without borrowing money, then getting a student loan will be the only option that you have if you wish to attend. Obviously if you can avoid borrowing money and still get your qualification then this will be the perfect situation but most people cannot afford to do this. However, there are still mana advantages of going to college which can be offset against the disadvantages of getting a student loan.

Assuming that you get your qualifications then the course that you do should enable you to get a better paid job. This additional income will add up and could make it well worthwhile going to college and paying for that loan. Obviously, you will need to pick your course carefully though. You will need it to be a course that will enable you to get a better job that will pay more and make it worthwhile paying or the course. You can probably do some calculations to work it out. You will need to find out how much the loan will cost you to start with. Then you need to find out how much extra you will be paid. Then you will be able to decide whether you think that the loan is worthwhile or not.

It can be tricky to predict how much the loan will cost due to the possibility of interest rate roses as well as not knowing whether salaries will change and whether you will be in work all of the time. However, you should still be able to make a good estimation as salaries are likely to go up if interest rates also rise. The rates on the student loan may be fixed anyway and so they may not change.

Disadvantages of a student loan

Of course, you will have to repay a student loan and this could take a long time. The amount that you borrow will be a big factor, but the loan will normally need to be repaid in full. This will mean that you will have less money available to pay for other things. It is worth finding out how much the repayments will be so that you can decide whether it will be an affordable amount. Obviously, it is very difficult to predict how much you might be paying out once you graduate. You are likely to be renting an apartment and will need to pay all of costs associated with that as well as covering your food bill and everything else. Then you will need to consider the costs of transport to work, perhaps running a car and then any additional costs that you may have as well, perhaps as a result of getting a partner to live with, having children and needing to move to a bigger apartment. It can be difficult to calculate this, but asking parents could be a good help as they will have gone through this and will know what you might need to expect.

Some people also find that having a loan hanging over them can make them feel stressed. They feel like they have a big burden and responsibility and that they always have to be thinking about making sure that they can manage the repayments. This is something which can be difficult to find a solution to. Knowing how much the repayments will be and that you will have enough income to repay them can be helpful though. If you can be confident that you will be able to afford them, then this will help.

Deciding whether to get one

It is worth taking some time to think about whether you feel that getting a student loan is right for you. Consider how you see your future and what course you would like to do. It can be worth thinking about where your career may lead. It is also to good to think about whether there are alternatives to a loan. It might be possible, for example, to get a scholarship or grant to pay towards the course. It may be that you could work and save up and pay that way. It is good to just look at what is available for you and what options there are that could help. You might be surprised at what financial help there is available or that you could apply for. Even if you cannot get any help, it is worth carefully considering whether the benefits of the course will outweigh the disadvantages of a loan.