This guest post from Preserved Sanity is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want submit your own reader story? Here’s how.
My son recently graduated from high school. Our family and friends generously contributed to his college fund and provided him with gift cards to local stores and iTunes.
His previous exposure to financial planning was minimal and scattered. His allowance seemed meager in his eyes. He didn’t have a checking account, so my husband and I deposited the graduation checks into one of our accounts specifically earmarked account for him. The cash went into a teapot in his room. I spread out the gift cards over the summer.
But when my son turned 18, he wanted to be responsible for his own money use. Therein lies the problem. We didn’t adequately prepare him to think ahead, so he wasn’t prepared for the consequences of using it up.
With his allowance, when it was gone for that month, he just had to wait a week or two for it to be replenished. He didn’t purchase large ticket items nor did he see a need to save for a larger item. He also battles Attention Deficit Hyperactivity Disorder (ADHD), which makes tracking and writing things down immediately a necessity.
This experiment in graduation largess has been a good teachable moment for him — and for us. We’re fortunate to have enough to cover basics and fun stuff. My husband and I had our own education in overspending and are working to get our credit debt to zero. We didn’t provide a consistent message to our boys and, in hindsight, we really wish we had.
Thinking it’s never too late to get started, we opened a bank account for our son. It comes with debit card access to use at college. We found a financial management course online, and both he and my younger son are working through the segments. I too have been reading and playing along. Our financial discussions highlight both long-term and short-term goals with specifics, not just generalities.
Since his college food card will also have some flexibility, he’s working on making a written system so that he can stay within his food card budget.
He’s also planning what he might need for incidentals. He decided on a $25 cash withdrawal at the beginning of each month. When it’s gone, it’s gone. Things like books, course supplies, laundry, etc. will be taken from this account. Some items will be reimbursed, such as any medical expenses. We’ll have it all written down before he leaves.
We also developed a contract on how we will contribute to his college finances and our expectations for his participation and performance in college. I’m sure we’ll still run into hiccups and we should have started this much earlier, but I feel he’s getting the hang of it.
We’ve started educating our younger son about finances and how money works now at age nine. By the time he graduates from high school, he’ll have a bank account, know how to budget, understand that credit is not “free money”, and equate money with work. We’ll also be more open within our family about our financial priorities. And we’ll try to model the behavior we hope to see from our children.
From now on, we’ll walk the walk, not just talk the talk.