Tough Love for College Frosh
Your child needs a little shock therapy to show him or her how to live on a limited income.
I recently received this plea from a desperate mother: Could you do a column on last-ditch advice for financially clueless college freshmen like my daughter? She's already spent the summer earnings she was supposed to use for spending money at school on $100 jeans and going out every night with her friends. Her father manages her account (often overdrawn) because it's easier to do it himself. But I shudder to think what's going to happen when she goes away to school.
What's going to happen is that college could cost a lot more than you bargained for. You don't have to track every nickel, but your daughter needs a little shock therapy and a dose of tough love to hold her accountable and show her how to live on a limited income. Not only will you save thousands of dollars, but she'll get a priceless lesson in managing money.
Tricks of the trade. Before she leaves home, have your daughter spend a week recording all her expenses with her friends. If she spends $20 a night, convert that into terms she can understand -- $100 a week on food and movies equals, say, 12-plus hours on the job.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Ask Dad to back off and have your daughter manage her own account. That means making deposits, saving receipts, balancing the account (either online or on paper) and learning how to write a check. (Hint: Go to Target or the Container Store and buy a matching notebook and Post-its to jot down expenses, plus a colorful container in which to toss receipts. Little reminders make a big difference.)
Before you shop for back-to-school gear (as your daughter will certainly expect), take an inventory of the stuff she already has. Then go together and set a reasonable limit on how much you're willing to spend. Your daughter will have to decide if she really wants to use up, say, one-fourth of her allotment on a single pair of $100 jeans.
Let her know up front which college expenses you'll pay for -- books, for example -- and which are her responsibility, such as food outside the meal plan. Because she's spent her summer income, you'll probably have to provide an allowance. Dole it out one month at a time, lest she blow through a semester's worth of cash in the first month. And when your daughter calls in mid September to say she's out of money -- and this is critical -- make her wait. Bail her out once and you're sunk.
Expect the unexpected. Even if your child is a good money manager, sending him or her off to college raises other financial issues. For one thing, parents are shocked at the cost of keeping a car on campus -- which includes not only insurance and a parking permit, but the tickets that are sure to add up when your child can't find a parking space. If you can, keep the car at home. With your young driver away, your insurance premiums might actually fall.
Anticipate surprise outlays. Suppose, for example, your son announces that he wants to join a fraternity. Does that fit into your budget -- or his?Set up an account with a bank that has low fees and plenty of ATMs near your child's dorm. College students are notorious for going to the closest ATM, even if they're charged a fee, rather than walk a block to a free machine.
A checking account with a debit card will do just fine. Discourage your kids from signing up for a credit card until they've learned to manage cash and you're confident that they won't run up a balance they can't pay off. One student told me candidly that he had used his "emergency" gas card to chow down at a service-station convenience store. Another student got a phone call from her father wanting to know "Who's this Steve Madden guy whose name is all over your credit-card bill?" (No emergency, Dad. Just a shoe store.)
Janet Bodnar, columnist and deputy editor, is author of Raising Money Smart Kids (Kaplan, $17.95).
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.
-
Farewell Paper I-Bonds: Savings Bonds Are Going Online-Only
The last remaining way to buy a paper savings bond in the U.S. (with your income tax refund) won't be available from January 2025. Tax filers will still be able to buy I-bonds online, however.
By Lisa Gerstner Published
-
Is Medicare a Good Reason to Wait Until 65 to Retire?
The average retirement age is 62, but many people wait until Medicare starts at 65. Should health care be the key driver of your retirement date?
By Evan T. Beach, CFP®, AWMA® Published
-
What Does Medicare Not Cover? Seven Things You Should Know
Healthy Living on a Budget Medicare Part A and Part B leave gaps in your healthcare coverage. But Medicare Advantage has problems, too.
By Donna LeValley Last updated
-
403(b) Contribution Limits for 2024: Good News for Teachers
retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
By Jackie Stewart Last updated
-
Roth IRA Contribution Limits for 2024
Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
By Jackie Stewart Last updated
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
By Vaishali Varu Last updated
-
How to Figure Out How Much Life Insurance You Need
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life insurance needs.
By Kimberly Lankford Last updated
-
Amazon Big Deal Days Is Coming! We’ve Got All the Details
Amazon Prime To kick off the holiday season with a bang, Amazon Big Deal Days runs Tuesday, October 8 and Wednesday, October 9. Here’s what to expect.
By Bob Niedt Last updated
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published