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.
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Thanks for sharing your story and thanks for admitting you didn’t prepare your child. This is one of those times when a crash course is not ideal. I have seen too many of my friends do this…not only with money but other lifes skills. This needs to start so much sooner. You can not do everything for your child and expect them to be able to take over thier own lives in weeks or months. My perspective is that you are not raising children, you are raising adults.
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Yes. I think you have taken some great steps to help lay out a plan for money during college.
My dad sent me off to college with a credit card and a long list of conditions on how to use it. I respected it because it was also his card and he paid the bills. I wish I could say that it “took” when I got my own card, but I made a lot of mistakes with that too.
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Hi, Preserved! I just wanted to check in with you because it seemed to me that the $25/month for incidentals is extremely low.
Most textbooks are $100-200 nowadays, and there are multiple per semester. Is your son planning on working during college to make up the deficit?
Also, does your son have any discretionary money to spend in his budget? It doesn’t have to be much, but it’d be much more likely to keep him on track if he can have SOME fun, especially if it’s with other students!
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Yes, I wasn’t sure if that was truly incidental $ or not. Books aren’t incidentals for college!
$25 is fine if that’s truly all he can spend, I guess, but he may need to find a job or negotiate some other deal with you.
Think about all the things you might spend money on in a month — and depending on where he is at school, they are often at the mercy of higher prices. That stick of deodorant or pack of pens often costs a lot more at the stores college students can get to easily!
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Hi. The $25 was for incidentals, not for school related needs. But, as the other commenter suggested, that might not be enough for the prices available on campus for deodorant, shampoo, etc. He will start with that but track how much stuff actually costs. One reason we set it low was to head off snacks and soda
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$25 does seem awfully low. A few burgers and ‘sodas’ over a weekend will chew that up.
I hope he enjoys the college experience!
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Is he going to college in a really isolated place? The people I know who went to, say, rural liberal arts colleges didn’t really socialize off campus much. But I always went to school in urban areas and . . . well, sometimes we did. I’m all for being cheap, but setting yourself up with a budget that means you have to say no (or be a mooch) every single time your dormmates want to order a pizza or see a movie is a recipe for trouble, in my opinion, unless it’s an absolute necessity.
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Agreed.
I attended a small liberal arts college that was almost in the middle of a cornfield. There weren’t too many bars in the small town, so people drank quite a bit. In this scenario, $25 for the month might last you one entire weekend.
Even if you don’t drink, $25/month won’t last long between health and beauty supplies and grabbing the occasional pizza with friends.
Maybe I missed it, but does the OP’s son plan to get a job on or off campus.
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maybe he’ll just make more frugal friends. It’s certainly good practice in case he graduates and can’t find a job right away.
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Rosa, maybe times have changed a lot since I was in college. But there’s a difference between making frugal friends and being the person who – for completely artificial reasons – never does anything because of money, and I don’t think the latter is conducive to either making any friends or becoming a well-rounded adult. Maybe I’m wrong and there’s plenty of people in college who never spend a cent on socializing, but I somehow doubt it.
(That said, I don’t think the OP needs to pay for any of this. No reason the kid can’t get a job to fund outside socializing. I just don’t think it makes sense to set him up to feel like a failure if he spends more than $25 a month.)
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I went to a state college and most of my friends and I literally never spent cash on anything, because we didn’t have it. Student life has a lot of exciting frugal possibilities. We went to free concerts, and no-cover bar events where we drank for free (young men probably don’t have this option, but $25 seems like it’s good for a moderate amount of low-quality beer) or saw our friends crappy bands play because we were on the guest list. Sometimes we even went to the university library and studied together, or hung out in the astronomy lab or backstage at the student theater together.
It helped that the campus bus system was free and most of us had the kind of crappy jobs that come with “perks” like free food leftovers or free movie admissions. But in general universities try really hard to make things accessible to students.
Now, $25 might not be enough to learn how little you get for blowing your whole month’s spending money on one big night on the town. But it’s likely more in line with what he’s going to have for “fun money” as a new graduate in a few years, suddenly responsible for rent, transportation, professional-style clothing, etc.
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How about sending him off with enough deodorant and shampoo for the semester? That stuff is pretty cheap if you shop sales, and pens and paper, etc. are not huge space hogs.
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I agree, I haven’t been to a laundromat in a couple of years, but the last time I was at one, it cost about $2 per load per machine, which means if he washes 2 loads of clothes per week, the laundromat alone (not counting fabric softener, detergent or dryer sheets) would cost him about $2 x 2 loads x 2 machines (washer and dryer) x 4 weeks = $32 per month!
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We are very fortunate that laundry is free and he will be about an hour away so we can pick up sales and such on sundries.
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Hi! Can I ask what finanical management course oyu found? You see, I also just graduated high school and I am on this sit because I’m trying my best to learn about financial management. When I saw this post I knew it would be a good one for me, so thank you for writing it!
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We started with themint.org. While it was intended for Tweens and younger, it started us in the right direction. One thing I had to do was refrain from purchasing any books or workbooks and use what was free and available from the library or the internet and use our own finances as examples.
The NEFE High School Financial Planning Program also had some wonderful resources and the games were helpful.
I have heard others have success with Dave Ramsey’s approach for teens.
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thank you! That was my question too.
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That was a pretty misleading post title. I was surprised to see no spending frenzy by the time I reached the end of it.
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I was surprised too! Feeling somewhat mislead, J.D.!
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I feel like there was a spending frenzy behind the scenes, we just weren’t given the details, just the allusion to it
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Yep, puzzling title. In fact, the whole article is somewhat puzzling — I’m not sure what the point of it was. Is there a chunk missing from the middle, perhaps mistakenly cut?
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I also thought it was going to be about how expensive getting set up for a dorm room is — my parents & grandparents probably spent $2-300 dollars on all that junk. (Seriously, I didn’t need some of it.)
But loved the article and what it turned out to be!
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Agree. Where was the spending frenzy? Did he blow through all his graduation money and gift cards and regret it by the end of the summer? I’m confused! It does seem like there is a large part of this article missing… I don’t see the problem or the conclusion presented.
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Oops. I guess I should have included that he blew through all the cash and the gift cards by the middle of July on books, Itunes, and Subway lunches. It was over $400. Just gone. I focused on what our response was but should have included more of the details of the actual “frenzy”.
The problem was a more general one of not having financial management skills that was highlighted to us by him blowing through much of his cash and gift cards without much thought.
The conclusion was that while we started late in the process, everyone can learn how to manage their money. As parents, we need to provide opportunities for our children to learn financial management and be thoughtful in how we show our own attitudes toward money and finances.
I appreciate all the comments and your taking the time to not only read it, but to respond to it. It will help me improve any future posts I might submit.
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What are gifts for but to use them? Especially if he’s going to be on a pauper’s diet of $25/month for fun money as soon as he starts school. Poor guy! Keep in mind that snacks and soda are part of social life– we always did late-night runs to Safeway in school, etc and they’re some of my favorite memories.
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No offense, but I think your rushing into to correct his $400 spending frenzy was perhaps an overreaction. Like the other Katelyn said, what was that money/gift card collection for if not to spend? And I think that cutting off his access to the money isn’t going to teach him good money management, but that mom and dad will come to his rescue if he ever makes a mistake.
Also, unless this kid is going to college in South America $25/month is ridiculous. My parents budgeted $300/month for my sisters incendentals alone through college.
My advice? Actually allow him to make a mistake. Maybe you don’t like the way he spent his graduation money. But until he feels like he made a mistake and regrets how the money was spent he is unlikely to truly learn any lessons from the experience. You can minimize the magnitude of the mistake by only giving him a smallish sum of money (another $400 perhaps)? But really in the grand scheme of things $400 isn’t going to look or feel like much to him if he’s buying textbooks and paying tuition.
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Great article on teaching children how to be responsible with their money. I think the writer was a little hard on herself. I could see a lot of my and my parents mistakes from when I grew up. I don’t have children but if I did I am sure that I would have made the same mistakes or worse.
We sometimes protect children like my folks did and think that is best. In the long run it is not helpful. She has certainly course corrected and it turned out beautifully. Her younger son is learning valuable lessons about finances and money management. Even though they started a little late the older son is still very young and can use those lessons for life!
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I was really surprised that neither of the sons had bank accounts. I’ve had at least one for as long as I can remember.
Kudos to Preserved Sanity for finding good resources to help her sons. I hope the system they have planned will take. The contract idea sounds like a good one — it’s good that both parents and student are going in with clear expectations.
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Hopefully your son will be willing to learn as much as he can from you though most of us have to learn through experience.
We began teaching our son about money as a preschooler. By 14 we were letting him make many financial choices for himself though he had very little money to spend. So by 18 when he had his first full time job, he was budgeting money for gas, clothes, fun, ect. & at 19 he’s now paying his own health & car insurance & maintenance on his car.
Our big mistake was not doing a very good job of teaching him about budgeting his things/time. He does well with his money but his organizational habits are so bad he wastes & loses a lot of money because he can’t find something or doesn’t take care of something. My husband & I didn’t agree on how to teach this though we did try. Our disagreements meant he didn’t really take much of what we said to heart. So I think this will have to be learned through experience.
I say you can’t change the past but only try to influence his future as well as you can. Let him deal with the consequences of the mistakes he makes on his own as much as possible. By having our son make financial choices by 14, when he made mistakes he still came to us. We would advise him on how to deal with it, usually telling him but for the most part we didn’t bail him out. That may be much harder to do now for you that it could really affect his future since he’s in college. I also know that doing that is usually much more painful for you than them & can cause stress & chaos for you. It will be better for them in the end though.
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You didn’t really mention the pre-college spending frenzy, but believe me there is one. I’d like to point out a few things to future college students and their parents:
1. If you are in self-catered accomodation, wait until you get there before buying pots and pans etc. EVERYONE turns up with a full set and there’s just not enough room to store it all! Just get a plate and one set of cutlery (borrow from home if possible!!).
2. You don’t need crazy amounts of pens and stationery. You will get A LOT of free pens at the “freshers fayres” at the start of your first year – enough for the whole first year if you’re doing it right!
3. You don’t need a brand new laptop. If you have one, great, but if not, either use the University’s multiple computer labs or pick up an old one for cheap on eBay or even Freecycle. You only need it for the internet, typing essays and maybe a few spreadsheets. (This of course does not apply to graphics/art/photography/architecture students!!)
4. Don’t buy loads of new clothes. People generally turn up to lectures wearing comfy old clothes (some people turn up in pyjamas!!).
One thing to be careful of is to make sure you don’t go too crazy in your first month there, or you’ll run out of money for the rest of the term/semester/year! I had some flatmates that did this and had to scrounge bread and pasta from the rest of us so they didn’t go hungry!
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I frequent a sheltered workshop thrift store that has great prices on everything. They have household items, decorations, clothes, etc. In the last couple of weeks I’ve seen moms of college students in there buying everything from small ironing boards to lamps, & more. With a litlle bit of cleaning, the items can be as good as new again. I know they saved a lot of money!
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Those are great tips. He didn’t find out his college room mate until early August but he held out on getting stuff for the room until they could talk. As result, he has the basics and is taking some of our gently used stuff rather than purchasing new. The biggest splurge for the room was buying those darn XL Twin size sheets.
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Great advice! I got through my degree using mostly campus computers. I was an older, married student, my husband and I shared a laptop at home but he was in law school at the time and needed it during the day.
Word of caution on using a clunker laptop (like more than 3-4 years old) is that schools usually have some sort of virtual learning environment and they might be buggy if you don’t have a recent operating system and/or browser. You may be required to turn in assignments through it and professors often post answer keys/grades/etc. there, so having access is key. But again, computer labs can be super helpful.
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Just a quick suggestion. I would never rely on campus computers. Most of the semester there isn’t a big issue, but towards the end of the semester, they can be absolutely jammed and hard to access. Also it is often a noisy environment. I needed to use them to run statistics until I realized I could rent the program. It was a horror trying to get work and papers in on time while competing with so many other students. The statistics I was running required hours and hours of computer lab time in noisy labs that were sometimes crazy hot and sometimes so cold I needed gloves. High quality lab top should be considered essential.
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Thanks, P.S., for your post. I agree with #3/Ashley who said $25/month for incidentals is WAY too low – it will not take him long to realize this and go over budget and/or use credit cards. That would be counterproductive, not only for the obvious reasons but because it would also “teach” him that this is normal and/or necessary to do.
I appreciate the difficulty of teaching the necessity of tracking finances to a teen who lacks that skill; my DS, age 15, has an Executive Function Disorder (from DH’s side, which helps me understand DH a lot better too) and finds tracking/organizing anything to be a monumental challenge. He also lacks any interest whatsoever in personal finance and managing money (although he is surprisingly good about saving up for things he wants), which makes teaching him PF to be nearly impossible (he just tells me, “I’ll hire you to handle my money”). I’d be interested in knowing what online course you & your sons did.
In the meantime, DS receives an allowance of $20/week; $5 of that automatically goes into an ING savings account. Occasionally I log in and show him what he has and have explained the concept of compound interest. Due to financial aid issues for college, I’ll probably withdraw these funds and lay them aside; at 0.9% interest, it’s not like having them out of a savings account for a year or two will make any real difference. He is expected to “live” off the remaining $15; if he blows it on comics and then wants to go to the movies with friends, o well. While he isn’t into budgeting (yet), he does grasp the general concept of keeping some in reserve.
He claims he wants to get a job when he’s 16. Should this happen, I will take him to my bank to open a checking account for his paychecks. As is the case with his iPhone, I will have full online access to check on it and warn him when trouble is approaching. I will also teach him how to keep his checkbook balanced, with the idea of writing it down right away.
I have warned him against credit cards, pointing out to him the issues I’ve had with repaying mine, and how the need to pay old debt prevents us from buying things he wants (like a new computer). When he’s older, I will look into helping him get one card from the credit union and teach him (I hope) how to use it strictly as a spending tool and not free money.
To be honest, how DS will handle money is shaped already by watching how his parents have done it, as well as his own abilities to prioritize and track detail. This is what frightens me.
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What a great plan you have in place. Thanks for sharing it.
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“He also battles Attention Deficit Hyperactivity Disorder (ADHD), which makes tracking and writing things down immediately a necessity.”
Hi! GTD has turned my ADHD-life around for the better (no more forgotten or untracked anything). I’ve implemented the system on Evernote, which works in all manner of sync-able platforms.
Same with any calendar that is enabled to pester you with reminders (because a calendar that you just write on is a calendar that is soon forgotten).
Once that’s taken care of, ADHD is like rocket fuel! (Also: partner up with an OCD, FTW)
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What’s GTD?
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I think he is referring to Getting Things Done, the book/system by David Allen for productivity.
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GTD
can’t miss it! best luck!
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Hello and thank you for sharing your story and that of your son.
I think your experience describes one of the crucial problems we are seeing in the States.
We adore our children so much that we fail to prepare them for life.
It is hard to say no to a child’s wants.
By instructing them in the elements of financial literacy, we can give them the gift of knowledge. With this they will be better prepared to live life as it currently exists.
There are opportunities for children to learn about finance at a young age through Jump$art and other financial literacy programs for children.
I wish you the very best.
Lori Blatzheim
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I am currently a junior in college, and I can tell you that I think your son will be just fine. Look back on your own college years… what percent of your choices were based on your own personal outlook at the time and what percent was based on something your parents taught you? College is new in so many ways that people tend to drift from what they’ve learned.
Personally, my parents taught me nothing about money growing up. They both modeled relatively healthy outlooks toward money (there was never any credit card debt), but I never had an allowance, and in fact, since my parents were divorced, their outlooks were very inconsistent with one another and I learned distinct styles from each. My dad spent lots while my mom was self-conscious about her lack of extra money. How did I turn out?
I spent a lot of money freshmen year. I liked Starbucks and didn’t like the dorm food, so my food bill every week was exorbitantly high, as we had no access to a kitchen. I didn’t think about money so much as calorie intake and avoiding the freshman 15. My dad got very, very upset with me after looking at my bank account bill — this was somewhat eye opening, as he had never equated ‘money’ with ‘responsibility’ before. Suddenly I began to understand.
Once I moved into my own apartment sophomore year, I began to track everything I spent, got a 15 hr/week job, and was saving more than the entire living stipend I got from my parents. I haven’t stopped tracking all my spending since. I’ve also applied to many scholarships with some success, done studies to get extra cash, and gotten over 400 dollars in bank account and credit rewards. I opened a credit card a year ago and have never let the charges roll over to the next month. Considering that my parents are somewhat competitive with each other in giving me stipends, I actually saved enough money over the course of about 13 months to buy a lightly used car, which I will need for my nursing clinicals this year.
So what I’m saying is – don’t blame yourself entirely for how your kids spend in college. People are different. It’s just a very new setting, and you may need to cut them slack in the first year (both grade-wise and financially). Best of luck!
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Congratulations on everything you have done right! And thanks for your words of encouragement. Good luck to you as your finish up your schooling.
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Good luck to you son. My ADHD son is starting his Senior year. We opened his a “high school checking account” when he was 12 or 13. When he started high school, I worked at a job where I got paid monthly, so he got his lunch money deposited monthly. He has always bought his lunch at school. I would transfer $75 to his account for his lunches. He manages that money. He can write a check and put it all in his lunch account of he can pack and use the money for other things. I think it has been a great intro for him to money management. He has does ok with his debit card too. His time management is a whole other story…
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We need a better explanation of what that $25 is supposed to cover. It won’t pay for even 1 book, let alone all of them.
$25 per month might not even pay for laundry, if done once a week.
Something is dreadfully wrong here.
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Thanks for the question. The $25 is mainly for incidentals like deodorant, shampoo, detergent, soda, etc. The books and other supplies would indeed cost much more and would be taken out of his account. He will have an on campus job that goes toward his tuition.
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If I were you I would use your coupon skills to get most of those items for free and either send him a care package or have them waiting for hime when he comes home for a visit. This is what I have done for my daughter. Otherwise, my daughter finds herself going to Target with her friends who are not on tight budgets and spending at their level. The $25 is still not enough. I would recommend $80.00 per month for walking around money plus you supplying the deoderant, laundry detergent, etc.
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I was going to say the same thing, at about $3 per load to wash and dry, the $25 might barely cover laundering expenses.
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I agree with Addie. You can teach your kids about PF and model wonderful money management skills, and some kids will just go their own way anyway.
There is only so much you can do.
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Totally agree, and emphasizing that the first year (and sometimes more) of college is just a very difficult transition for many kids, which leads to less-than-ideal habits, be them spending, studying, relationship, whatever.
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Wondering which online financial management program you found & liked?
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$25 for BOOKS and incidentals? Per month? This is not realistic, sorry!
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It’s great that you are all working through the course together, but: $25 a month for “incidentals” is probably not going to cut it, particularly if you’re including books as an incidental. I was in college in the 90′s and books ran me almost $500 per semester. Can’t even imagine how much they must cost now. Granted, there are probably better deals on the internet now, but a lot of classes require BRAND NEW books, or if the professor is a little narcissistic, the professor’s own book.
Also, if your kids develops a taste for *ahem*beer*ahem* $25 isn’t going very far either.
Sounds like he will have to get a job pretty soon. There’s nothing wrong with that, it will teach him time management and money management, definitely.
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My daughter is a junior in college. I have drilled sound money management into all my children all their lives, but apparently she and my 12-year-old son are slow learners. When she was 16, we got her a debit card and put her clothes shopping money on it monthly, with the understanding that all purchases had to be shown to me ASAP in case I didn’t approve. She constantly whined that it wasn’t enough, but when I had taken her shopping, we managed because I had a limit for each type of item, which I communicated to her. Finally in the last few months she has taken to shopping at Plato’s closet, cooking more and asking herself before each purchase “Is this a need or a want?” and “Is it worth the price?” and she is setting a little money aside each month for an emergency fund and to pay my husband back for car repairs.
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Please post back and let us know how that $25/mo goes. I doubt it will last long.
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I’d love to see the contract you worked out with him.
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I think the best way for kids to learn to budget is for them to get a job. Then they start thinking of the cost of things in how many hours of work. Plus they are less wanting to spend their own money than money given by someone else.
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$25 might be a bit short for entertainment expenses but otherwise it’s a great plan! My parents started early with me and I’m so thankful that they taught me about money. I’m on track to graduate debt free.
Chase
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Thanks everyone for your suggestions. He will be in a rural setting so most entertainment costs will be free and on campus. The laundry is free and in the dorm basement. He doesn’t have expensive tastes just hobbies – books and music. He will have a food plan which also allows him to get snacks at the cafe and have access to full meal plans. We have a bunch of regular school supplies and I use coupons for just about everything else. I think the $25 should actually work for him. The main point about my piece was how unprepared he was as a young person when he came into a significant amount of money. The college contract was based on the College Board site on expectations, our contributions and his contributions to his education. While I agree with you that having a job makes one realize how much effort goes into making money, we felt that our son’s main responsibility in high school was his job as a student. We also recognize that not every family has that luxury. For college, he will will have a position on campus that will go towards his tuition because at this point, we need him to participate financially. I would be happy to write at winter break about our results and hopefully caption the post correctly and capture the experience.
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A lot of people have focused on the $25/month incidentals budget as being too low, and I initially reacted the same way — how could he live on just $25/month for incidentals?!?! However, it sounds like a lot of the things that I would have considered “incidentals” you already have covered in other ways (e.g., meal plan, free laundry). Plus, if he needs more cash, he can always supplement that budget by earning it himself, whether that’s selling a few things on ebay, getting a server job a couple nights, whatever. It sounds to me like you have a plan for success — best of luck, Susan!
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I think this is a great article, and a great plan.
The only thing I wonder about is how you defined with him which expenses you were going to cover? My son is still young (7) so we basically cover everything except toys, and I wonder when to transition out of that.
I know too many adults who don’t look at the total amount of money available in their budget, but instead look at whether a cost is justifiable – it’s for work, it’s for the kids, it’s food, etc – and end up treating the credit card like Mom, as if the interest is less if it’s something they really really really need.
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Thanks for sharing this article! Four years ago when our son went off to college we struggled with an allowance amount too. We decided on $100/month. This actually ended up being too much. He attended a private college, lived in a dorm, had a meal plan, free laundry room in the basement, free copies and twenty four hour computer access. Because he was there on an academic scholarship and participated in a sport his “free time” was limited. For this particular college all athletics must receive A/B in all courses. This really helped assure the academic scholarship stayed in place throughout his years there. This also, helped keep his extra spending to a limit. I am sure had the free time been more abundant the $100 would have been used. No, we did not require him to obtain a job, we just did not think he would be able to handle it.
Throughout his years growing up we never hid money issues, either good or bad. I believe this helped him tremendously. He always had a savings account but never a checking until he graduated from high school. He is currently working part time, but looking for full time. Last I checked his checking account had a higher balance than mine.
I must say college was a learning experience for both my son & me.
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Susan,
Thank for your transparency in this matter. It takes a lot of humility to admit that you haven’t handled something properly in the past and to make the necessary adjustments to head in a different direction.
A few things that I’ve found crucial in navigating parent/student financial decisions:
- Just because you’ve made financial mistakes in the past, doesn’t mean that you’ve missed your opportunity to teach your son financial lessons/principles now. The importance of modeling doesn’t end when your kid walks across that high school graduation platform. It’s just as important for a kid/young adult to see their parents correct their mistakes, as it is for them to see their parents make the right choices.
- Communicate. Communicate. Communicate. Sit down EVERY semester with your son and make a budget with him. Be abundantly clear about what expenses you will cover, what expenses will come from his savings and/or earnings, and how to bridge a potential gap. This way, you largely eliminate most potential surprises and misunderstandings.
- Don’t attempt to hound him or micromanage all of his financial decisions, but rather force him to be conscious and take ownership. Ask questions that encourage him to monitor and be aware of his decisions and the associated consequences. “So how close were we on that ‘incidentals’ figure? Do you think it needs some adjusting?”
Be encouraged by the fact that it is NOT too late to have a positive financial influence on your son. Good luck and God bless!
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Thank you so much for sharing your story. Teaching and learning financial responsibility at a young age are so important.
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Such an important story to share. Kids really start to get the basic concepts of money as early as the 3-5 range, and shaping habits early is really effective. That said, I love the philosophy that it’s never too late to get started. If you’re a parent looking for online tools to help teach your kids good money habits, here’s a list of 21 that might be of interest: http://list.ly/list/oD
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I grew up in a financially conscious household. My parents were war refugees and this afforded me a life lesson on personal finance, theirs. I was taught to spend only on what is necessary and save like mad for everything else. Taught, but rarely practiced.
Early in my first semester, my mother came down to campus for a visit. We went into town and she asked me to stop by the bank. I had no clue that she planned to open a checking account for my own personal use. She loaded the account with $500 and set up a monthly transfer of $100 from her account to mine. She wasn’t clear with the intent of this account, but the idea was for me to handle this money as I see fit.
College is a special place. My chance to be a pseudo-adult by managing my own schedule, my own well-being and my own finances. My perception of this windfall was to enjoy life without parents. Thanks, mom!
Needless to say, I blew through all of it in a matter of a few weeks. Off-campus food? I’m in! Beer run? I got it! Wireless mouse? Cool! I spent without any regard for the principal because I knew I was getting another $100 at the end of the month. Lifestyle inflation quickly set in, but I was having the time of my life.
Despite everything I knew about money, I fell off the wagon when it came to putting my knowledge into practice. I was guilty of frivilously spending money really meant for me to save or spend wisely.
When I later caught up with my mom over winter break, we discussed the status of my account and I had told her outright that I spent it all on nonsense and have been “living” off the $100/mo ever since. She was disappointed, but expected this outcome. She essentially spent 800 bucks to teach me a lesson on budgeting.
She doesn’t regret it nor do I.
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I know it’s not possible for all families, especially considering this particular mom wanted her son to concentrate on school during his high school years, but having a job early on did a world of good for me. I had checks, a debit card, money in my own account, etc., from the age of 16. I didn’t have to beg mommy or daddy if I liked a certain shirt or wanted to hang out at the mall and buy a treat while there. I started covering my own costs before I turned 18 (car payment, gas, insurance), which is a great life lesson in the value of money. It can’t really be taught. It must be FELT.
I have a coworker now whose son is 18 and has never used a debit card machine. He also – still – doesn’t have his own bank account. He’s not ever been employed. And THEN she has the audacity to complain when he acts totally and utterly helpless. Well … what did you expect?
We parents must do a better job inundating our children with experiences revolving around money. I just don’t think teaching beats dealing with one’s own cold, hard cash.
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Like Susan, my parents also said that during high school my job was to be a student, so I didn’t have a “job” per se other than when on school vacation. However, I did baby-sit a lot, which gave me a lot of savings, contributed to my financial education, etc. That said, my parents opened savings accounts for me and my brothers at the local bank around when I was 8 or 10, I would guess (I was the oldest), and taught me how to make deposits, use the account register, and then use the ATM once we got cards. I remember distinctly in freshman year of college (1999-2000) that a number of my friends had no idea how to DEPOSIT money in the bank, but only knew how to withdraw! I recall teaching one of them how to write a check and another how to keep track of how much money was in her account. It was surreal!
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In my experience, if you’re excluding college textbooks and books, the $25/month will be enough for a *tight* incidental budget. That is, if the incidental budget excludes entertainment, and if your son has the willpower to roll over the unused portion for the next month. Dids frequently get sick in their first year because of the tight quarters. That’s $8 for cough medicine and $30-ish for copay (his awesome friends will bring him extra food from the dining hall). He’s now $13 over the monthly budget and down to $24-ish per month for the rest of the year. The same holds true for printing–you’re either talking $120 for a year for 2 ink cartiges or $10 average per month (with most of that used up during term paper time) for computer lab printers. If he plans on spending $25/month, every month, he’s going to run into a problem. However, if your son understands that this money is for necessary incidentals vs. beer or name brand shampoo from the overpriced campus store, then he will do just fine.
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I find it interesting how many people didn’t work in high school and didn’t have a bank account until college? My dad wisely set me up with a savings account at age 8, and I’ve had a credit card since age 13 (always paid in full each month for the last 14 yrs!). I also worked a dirty job for minimum wage after school and every summer starting in grade 10. I had money to spend, but after working a backbreaking job to earn it, money meant a lot more and I quickly learned to be smart with it.
Where I’m from I wasn’t an exception to the rule, but in university I was shocked how many people had no idea how to deal with money. I think that the best thing the son can do is get a job and use half for incidentals as he deems fit, and bank the rest for when he needs it. Even working a few shifts a week will give him enough cash to enjoy the rest of his time when not studying or working, as well as teach good lessons about what things are really worth (is another beer at the bar worth half an hour of my time working tomorrow?). By the time he has worked to accumulate some money, he’ll have appreciated how hard it was to earn the money and be more likely to take some pride in having savings than to spend it on things he doesn’t truly want. Paying for something with money you earned makes you look at it differently and value it more because of the sweat it took to earn that money.
And from my experience, the dirtier and lower paying the job, the better the lesson (although at the time, I wouldn’t have said either was a good thing!). In university my work ethic was sky high because I knew I wanted to do something better than that for the rest of my life. If you’ve been in a pit shovelling rotten corn in 90 degree heat, you are pretty much prepared for anything else life throws at you!
Best of luck to both you and your son. I have a feeling you will feel much better sending your youngest off to college knowing he’s well prepared to deal with his finances, but you are certainly on the right track!
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I had one small summer job when I was around 14 & that was it until college. But my parents & my school still made sure I understood how to handle money. In my case, we had no extra money for social or after school activities so I didn’t spend any at all. When I was 15 my dad became paralysed, we had one car & lived in the country so I couldn’t get to a job if I could have found one.
In my son’s case, we chose to not require him to get a job through high school (it was something my husband & I disagreed on, he worked hard through high school & I didn’t, he said our son would be working the rest of his life to let him enjoy high school – so that’s what we did). But, we still taught him about finances & how to handle money. When he was small & he wanted a new toy, I helped him figure out how many hours dad had to work before he could buy it – did we want dad away from us that long just to get a toy? Through high school he helped my husband maintain our budget, saw what bills came in, how much we saved & what went to charities. We talked about money openly & often. When we wanted something new as a family we met & decided what we had to give up to get it & agreed on what we’d do.
At 19 he’s working his 2nd full time job, taking advantage of putting 15% in his 401k & his employer matching a percentage of that & paying his own way as well as saving most of his pay-checks while he has few responsibilities.
I say all of this to say that yes, working through high school is one very good way to learn how to handle money but it’s not the only way. And it’s not impossible to learn it after high school, it’s just much harder. Talking about it openly can really make a big difference. Looking at choices as a family helps children to see the cost of things.
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I certainly didn’t mean a job during high school is the only way to learn to appreciate and manage money, but it is a pretty easy way to teach responsibility because it gives you money to manage early on, and if you spend it all, you can replenish right away by working. Limits big mistakes because nobody is giving high schoolers large lines of credit etc, so you can basically only spend what you make. Even just having a bank account at a young age was a good start, because I understood how banks work and starting saving for big purchases back when a big purchase was a $50 item.
I think you hit the nail on the head by starting teaching your son early on. That is the main part I was getting at, understanding and valuing money at a much younger age than after high school. At 18 going off to college, life is already full of learning and new experiences and expenses now that you are off on your own. Having a solid foundation in place before that is a huge benefit and lets you focus on everything else.
Your son is light years ahead of most at 19, and likely ahead of many at 29 as well! Biggest advice to learn from that would be to start early and use things as teaching opportunities the way Jen did. The anecdote about the toy is a perfect way to plant that seed early of what things are worth in a very practical and natural way.
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Yes, I do agree with what you said.
I guess my main point is that if your kids don’t have money or opportunity to earn it in high school (like myself & my son) it doesn’t mean you can do a lot of other things to make sure they are ready to handle money when they do earn some.
My parents did such a great job teaching this, along with a few mentors I had in high school, that we were able to pay off our mortgage by the time I was 32 & were debt-free a few yrs later. We made a huge deal with our then 6 yr old son as well about paying off our mortgage early. All through his growing up years we reminded him of things we were able to do with him because we didn’t have a mortgage.
Living on one small income & putting most of that into his education meant we still lived very frugally but talking about our budget openly makes a huge impact, I think. We did hound, or moan about what we didn’t have. We just stated facts – we have this much & we have these choices. We weighed our choices & chose. I am very excited to see him doing this now with his own money as well as time – is it worth my time to save money this way.
Love this blog & the encouragement it gives to families to stay on top of their budget, no matter how small it is.
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