Skin in the Game

As parents, we love our kids. We want the best for them, and we want them to succeed beyond what we have achieved. The problem for our kids is we have already achieved a lot. We are engineers and lawyers and entrepreneurs that have reached the upper part of income earners. Our kids look at that and enjoy a lot of the benefits of Mom and Dad having disposable income. There is also a lot of pressure on our children.


High Standards

Our standards as parents are high. Most likely we worked hard. We made good grades and pulled the all-nighters to make the top grades. We worked the extra shift so that our boss saw we are go-getters. Now that we are a few years down the road, and have the salary to show for our hard work, our kids are older and didn’t see or remember the beginning. They see the benefits and didn’t see all the hard work we did in our teens and 20’s to get where we are today.

I would guess that most of you reading this probably had some “skin in the game.” You had to work to pay your expenses duringskin in the game college. You had to fill out hundreds of scholarship applications to get that funding for school. You worked 120-hour weeks while you were setting up your business. You lived on peanut butter and beans in a one-bedroom apartment to save as much as you could to fund your business venture.

I would also guess that you had someone in your childhood that you admired that worked hard. You saw something in that person that you wanted. Whether it was the determination, the continued effort, or the resilience to overcome failure time and time again, you wanted to be like that person.

For me it was my Aunt. She used to tell me that we are going to be working the rest of our lives in some form. We might as well work hard earlier when we have strength and energy to spare to get to a place we want to be when we are older and have lost a little pep. I thought about her telling me that every time I thought about giving up on my dreams.


To Pay or Not to Pay, That is the Question

So, we are teaching our kids to work hard. Should we make them do all the work? Should we pay for everything?

Laura Hamilton completed a very interesting study that revealed some insight when it comes to paying for your child’s educations. The study showed that students who had their education paid for were more likely to graduate, but likely to only do what was adequate to graduate. These students whose parents paid for all of school had lower overall GPA’s compared to the students who had to pay for some of their schooling.

So what do you do with this information? Do you make your kids pay for everything? Do you hope they don’t burn out because they are working two jobs and trying to take 15-18 hours of coursework? Or do you give your kids every opportunity to graduate, but make it more likely that they do just enough not to get kicked out of school or lose their money stream from Mom and Dad?

The author of the study seemed surprised by the results, but to me, this makes a lot of sense.

This can all be summed up in the statement attributed to Joseph Kennedy, “When the going gets tough, the tough get going.” If we make things easy for our kids and give them the funds to complete school, they may finish more easily, but that doesn’t help them realize their full potential. On the other hand, if we require them to come up with the money, the time and the grades, a lot of them might flame out and just quit.


You are the Parent, Act Like it

This is where the parenting comes in. We need to have the relationship with our kids that allow us to help make the best decisions with them and be upfront and show them the cost of education. We need to tell them where the money is coming from and how that will impact both of our lives. They will appreciate the honesty and being identified as mature enough to be trusted with this information.

The other interesting aspect of this study was that even though the most affluent families at the most elite universities paid all costs for their lower GPA earning students, it didn’t affect the students’ post graduating income. The author thought that the connections of the parents enabled the student to acquire a better job regardless of grades. So if you are part of the super elite I guess you are okay either way. I guess it goes to show; it’s not what you know, but who you know. skin in the game


Should They Work?

How should the student contribute if the parents aren’t going to pay for everything? The number one way students are helping to pay is by working while going to school. I’m not sure what number two or three are, but I imagine gambling and counterfeiting are way down the list.

In a 2008-2009 study, 79% of students were working in some capacity while attending school. A 2015 study estimated that 70% of students are working. Forty percent of those undergraduate students are working full-time (over 30 hours). If the jobs relate to the field of interest in the student’s degree plan, they can have added benefit. Students that worked around 10-15 hours per week did better academically than students that didn’t work at all.

If you attend lectures 15 hours a week and work another 10-15 hours per week that should leave plenty of time for studying and extracurricular activities. Personally, I think students should strive to work more. This is especially true if the job could lead to a network that could help land a job or get into postgraduate schools.



Whether you should pay for college just because you can, seems to lead to mixed results. Taking care of every cost for your student seems to lead to laziness and inferior results overall on average. Asking your student to work toward their degree, not only academically, but also putting some time in working for wages seems to yield superior results. I think that having a little adversity in the work/school life of a student will encourage growth. We still need to step in as parents from time to time. We should mentor and coach them to solutions that will yield the desired result. We also need to let them put some skin in the game.

What do you think? Are you planning on paying for everything? Did you have to work during school? Was it a benefit or a hindrance?

Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

2 Responses to “Skin in the Game

  • This is what I think. I want to help, not provide. I want to subsidize their education, mostly because I think the prices of higher education are ridiculously high. I hope they get scholarships of some sort, I hope they attend in state schools at in state tuition rates.

    I definitely don’t want them to be entitled or feel entitled to anything. I am not a Physician though, just a six figure paid finance professional, but it’s more than enough, trust me.

    • Combating the feeling of entitlement is a never ending battle. It seems like culture today feeds it.
      I think that feeling is a destroyer of wealth.

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