How to help a college student save her money?
June 13, 2013 7:58 PM Subscribe
My 19-year-old daughter loves to spend every dollar she earns. She is good about working, but she's awful at saving. She's got a great summer job, and I want that money to both cover some of her college tuition AND her living expenses in the fall. But how do I do that without becoming an obnoxious helicopter parent?
My daughter has worked steadily for nearly three years, but she spends her money down to pennies within days after getting her paycheck. She is often borrowing money from friends as her own "payday loan" scenario, so she ends up with close to nothing. There have been times I've taken the paychecks and done the savings for her, doling out an allowance of my choosing. Other times I've left her to figure it out, but she ends up not saving anything.
I'd like to have her be responsible for saving and helping to pay her bills. I don't want her to get into the habit of becoming a borrower, whether that be informally with friends or formally with credit cards.
I've considered the developmental "let the child fail" option, but I'm not willing to have her give up her 4 year university on the other side of the country in order to teach her a lesson. But I also don't want to be that parent who is still managing a child's income endlessly.
How do I balance these values without driving both of us crazy?
My daughter has worked steadily for nearly three years, but she spends her money down to pennies within days after getting her paycheck. She is often borrowing money from friends as her own "payday loan" scenario, so she ends up with close to nothing. There have been times I've taken the paychecks and done the savings for her, doling out an allowance of my choosing. Other times I've left her to figure it out, but she ends up not saving anything.
I'd like to have her be responsible for saving and helping to pay her bills. I don't want her to get into the habit of becoming a borrower, whether that be informally with friends or formally with credit cards.
I've considered the developmental "let the child fail" option, but I'm not willing to have her give up her 4 year university on the other side of the country in order to teach her a lesson. But I also don't want to be that parent who is still managing a child's income endlessly.
How do I balance these values without driving both of us crazy?
Presumably you are the one paying tuition if not her? If that's the case, set up some amount she needs to pay you per paycheck towards the tuition.
posted by Betelgeuse at 8:17 PM on June 13, 2013 [4 favorites]
posted by Betelgeuse at 8:17 PM on June 13, 2013 [4 favorites]
What about giving her an actual bill to be responsible for, and if she doesn't pay, welp, I guess your cell phone got shut off (or whatever other comparable low-stakes thing). Or some other low-stakes need like gas or groceries that she now has to provide for herself or go without?
There's a weird space around that age when you're transitioning from "summer job" type stuff where the money is yours for spending money on fun stuff, and your parents are responsible for all the boring things like textbooks and groceries, and having a job that you live on in order to support yourself. I think it's really hard to get the latter part of that unless you're actually tasked with supporting yourself in a way that has consequences. She probably knows that, whether she saves or not, you won't make her drop out of school. But she may not know that you lose no sleep if she has to go without a phone or eat ramen noodles.
Let her suffer a little bit. She'll get it.
posted by Sara C. at 8:17 PM on June 13, 2013 [7 favorites]
There's a weird space around that age when you're transitioning from "summer job" type stuff where the money is yours for spending money on fun stuff, and your parents are responsible for all the boring things like textbooks and groceries, and having a job that you live on in order to support yourself. I think it's really hard to get the latter part of that unless you're actually tasked with supporting yourself in a way that has consequences. She probably knows that, whether she saves or not, you won't make her drop out of school. But she may not know that you lose no sleep if she has to go without a phone or eat ramen noodles.
Let her suffer a little bit. She'll get it.
posted by Sara C. at 8:17 PM on June 13, 2013 [7 favorites]
What is her incentive to save? Does she have a goal? Saving for a new TV? Saving for retirement? Saving for her college expenses? Of course as you stated, it is the last one, but does she get that? I think the first step is she has to learn to have financial goals. Does she truly believe if you told her she would need to start using some of her earnings for her college spending money that you would cut her off or cut her back? She does not seem to have the sense that she has any present or future need for money beyond her immediate, I like that shirt, needs.
I know you don't want to let her fail, and I agree that the stakes are too high here to let her have a complete fail. But, if she gets $100 per month spending money, then tell her it will be $75 going forward and any difference she has to make up. She won't starve, she won't be on the street, but she may see a need to save. I would also consider telling her that she has to give you 25% of her take home (or whatever number) that you will bank for her college costs.
Went I first graduated from colllege I lived at home while I commuted to work. My mother made me pay her $100 a month rent. I dutifully paid for about 18 months, then I moved out. She gave me the $1800 back and explained to me the power of saving.
posted by JohnnyGunn at 8:19 PM on June 13, 2013 [4 favorites]
I know you don't want to let her fail, and I agree that the stakes are too high here to let her have a complete fail. But, if she gets $100 per month spending money, then tell her it will be $75 going forward and any difference she has to make up. She won't starve, she won't be on the street, but she may see a need to save. I would also consider telling her that she has to give you 25% of her take home (or whatever number) that you will bank for her college costs.
Went I first graduated from colllege I lived at home while I commuted to work. My mother made me pay her $100 a month rent. I dutifully paid for about 18 months, then I moved out. She gave me the $1800 back and explained to me the power of saving.
posted by JohnnyGunn at 8:19 PM on June 13, 2013 [4 favorites]
Also, let her know right now that you aren't going to give her as much money for living expenses next year. Obviously, you're not going to let her go homeless and/or starve, but you should go very barebones with financial support next year (and let her know NOW that you're going to do that). It's a way you can let her fail without endangering her education.
posted by Betelgeuse at 8:21 PM on June 13, 2013 [2 favorites]
posted by Betelgeuse at 8:21 PM on June 13, 2013 [2 favorites]
I think you have a few options. You can (and probably should) stop giving her payday loans.
I see three different ways of accomplishing the savings goal:
(1) Give her a savings goal, and tell her she has to meet it by the end of the summer. How she does that is up to her.
(2) Help her set up an automatic transfer from the account her pay cheque goes into to a separate savings account, with the amount required from each pay period set to add up to the savings goal by the end of the summer. (I still do this. You can't spend what you don't see.)
(3) Insist that she hand over the portion of her pay cheque required to meet the savings goal to you each pay period and you set it aside for savings.
So the options range from pretty hands-off, to totally hands-on. It doesn't sound like 1 would work for her, but possibly 2 would, especially if you set up the savings account so that it cannot be accessed from the debit/ATM card. If you think even that wouldn't work, I honestly don't think there's any problem going with 3. She's young and not great with money. Sometimes you need someone from outside enforcing the situation to get you in the habit. I don't think "letting the child fail" really works unless they have been given a good foundation in how to do something first. Taking care of your finances on your own when it really counts is a big step, and a little hand-holding or breaking it down into baby-steps isn't helicoptering, in my opinion.
I'm a great saver while also being a terrible fritterer away of money. Knowing that I've paid my bills and put money in savings first let's me fritter away the rest guilt-free, and I think that's a skill that's worth learning.
posted by looli at 8:22 PM on June 13, 2013
I see three different ways of accomplishing the savings goal:
(1) Give her a savings goal, and tell her she has to meet it by the end of the summer. How she does that is up to her.
(2) Help her set up an automatic transfer from the account her pay cheque goes into to a separate savings account, with the amount required from each pay period set to add up to the savings goal by the end of the summer. (I still do this. You can't spend what you don't see.)
(3) Insist that she hand over the portion of her pay cheque required to meet the savings goal to you each pay period and you set it aside for savings.
So the options range from pretty hands-off, to totally hands-on. It doesn't sound like 1 would work for her, but possibly 2 would, especially if you set up the savings account so that it cannot be accessed from the debit/ATM card. If you think even that wouldn't work, I honestly don't think there's any problem going with 3. She's young and not great with money. Sometimes you need someone from outside enforcing the situation to get you in the habit. I don't think "letting the child fail" really works unless they have been given a good foundation in how to do something first. Taking care of your finances on your own when it really counts is a big step, and a little hand-holding or breaking it down into baby-steps isn't helicoptering, in my opinion.
I'm a great saver while also being a terrible fritterer away of money. Knowing that I've paid my bills and put money in savings first let's me fritter away the rest guilt-free, and I think that's a skill that's worth learning.
posted by looli at 8:22 PM on June 13, 2013
So are you saying that if she doesn't cover X amount of college funding, that you cover it instead?
Really, I think you should put a limit on it.
"If you don't save $X for books, then I won't cover the rest of the text book money for this semester."
That way she might have to tough it out and borrow books or go to the library for their reserve copy. I think the hassle of that for a semester will teach her to save enough of her money to buy her books.
If she spent the money for books on new clothes or whatever, then she will have to figure out a plan to pay for that $150 text book.
That way, I think tuition can be paid to keep her in school, but the actual convenience of keeping grades up and attending class is on her.
Also, does she know much you contribute (for school, bills, etc)? Put it on a big piece of paper in big marker. "Last year I paid $X for school, you made $Y but only paid $Z for school. You need to pay $W this year."
posted by Crystalinne at 8:23 PM on June 13, 2013
Really, I think you should put a limit on it.
"If you don't save $X for books, then I won't cover the rest of the text book money for this semester."
That way she might have to tough it out and borrow books or go to the library for their reserve copy. I think the hassle of that for a semester will teach her to save enough of her money to buy her books.
If she spent the money for books on new clothes or whatever, then she will have to figure out a plan to pay for that $150 text book.
That way, I think tuition can be paid to keep her in school, but the actual convenience of keeping grades up and attending class is on her.
Also, does she know much you contribute (for school, bills, etc)? Put it on a big piece of paper in big marker. "Last year I paid $X for school, you made $Y but only paid $Z for school. You need to pay $W this year."
posted by Crystalinne at 8:23 PM on June 13, 2013
[Whoops, sorry. I saw that it was her friends she was borrowing from, but forgot to delete that line from my answer.]
posted by looli at 8:24 PM on June 13, 2013
posted by looli at 8:24 PM on June 13, 2013
Chances are she has never suffered any serious consequences from her behavior. She has no reason to change, and if she gets into trouble you, or her friends, or the guy who has a crush on her, will save her. Based on what's happened with a few of my friend's children, things will only get worse.
First, show her the marshmallow talk.
Then, do a budget for the summer, and one for when she is at school.
Discuss and put down in writing exactly what sort of emergency you will provide a loan for, and what isn't a valid reason. Agree on how much she needs to have in reserve for the little emergencies; ie cab back home when drunk, dose of Plan B, etc.
Get her a smartphone app to track expenses and manage the budget. Go back to being her bank, take her entire paycheck, and only give her according to the budget. You'll probably need to think of how to handle things when she borrows money from friends, then can't pay them back cause it's not part of the budget. And do a video inventory of the house, in case she decides to visit a pawnshop (heck it's good to have that anyway)
Do not co-sign anything, pre-paid credit cards can avoid problems, and if you lend her your car realize that you will have to pay for tickets, impound fees etc.
Lastly, therapy so she could figure out the real issues that are causing her self sabotage.
posted by Sophont at 8:34 PM on June 13, 2013 [1 favorite]
First, show her the marshmallow talk.
Then, do a budget for the summer, and one for when she is at school.
Discuss and put down in writing exactly what sort of emergency you will provide a loan for, and what isn't a valid reason. Agree on how much she needs to have in reserve for the little emergencies; ie cab back home when drunk, dose of Plan B, etc.
Get her a smartphone app to track expenses and manage the budget. Go back to being her bank, take her entire paycheck, and only give her according to the budget. You'll probably need to think of how to handle things when she borrows money from friends, then can't pay them back cause it's not part of the budget. And do a video inventory of the house, in case she decides to visit a pawnshop (heck it's good to have that anyway)
Do not co-sign anything, pre-paid credit cards can avoid problems, and if you lend her your car realize that you will have to pay for tickets, impound fees etc.
Lastly, therapy so she could figure out the real issues that are causing her self sabotage.
posted by Sophont at 8:34 PM on June 13, 2013 [1 favorite]
I don't want this to sound like I'm suggesting a bribe scenario but...what if you created some sort of incentive? I'm not thinking huge but if you create a scenario where she gets something for doing it, that might make her more interested in the possibilities associated with saving her money rather than making it about the risks of NOT doing it. Those are very real of course but based on the description you are giving I'm wondering if that might be more effective. Maybe something like you control a savings account for her and if she contributes $25 a month you match it? Another option is to covertly funnel her money into savings in some way. For example, I currently have a cell phone family plan and pay for my mother's cell phone as well. Instead of having her pay me her half, I have her put it in a savings account. That's $800 dollars a year that is being passively set aside for me, with no risk of me dipping in.
Also, it might be worthwhile to have her see a financial adviser to explain the finance basics to her. I went through a terrible period of overspending in my college years and paid the price. I think if I had understood more about finances in general and been exposed to what I could have been doing with my money that would be more beneficial, the outcome might have been different. I'm by no means perfect now, but I get a lot more excited about having a high savings balance and zero balances on my credit cards than I ever imagined I would back then because I understand what that represents and gives me access to.
posted by amycup at 8:39 PM on June 13, 2013
Also, it might be worthwhile to have her see a financial adviser to explain the finance basics to her. I went through a terrible period of overspending in my college years and paid the price. I think if I had understood more about finances in general and been exposed to what I could have been doing with my money that would be more beneficial, the outcome might have been different. I'm by no means perfect now, but I get a lot more excited about having a high savings balance and zero balances on my credit cards than I ever imagined I would back then because I understand what that represents and gives me access to.
posted by amycup at 8:39 PM on June 13, 2013
It doesn't sound like you've ever allowed her to fail. Stop doing that. You have trained her to believe she will always have a safety net, and you know that's not healthy. Let her suffer the consequences of debt. Let her see what happens when her friends decide to stop financing her bad habits. You need to be willing to let her fail big -- and yes, if that means she is unable to afford college because she is being irresponsible, she is now at an age where that needs to be on her head, not yours. You are doing a disservice to her by enabling her in this.
Have you ever sat her down and had a real heart to heart with her about this? You could say something like, "Every month you get a paycheck, and every month it is completely gone and you have to borrow money from other people in order to make ends meet. I would like to know why this is, because this lack of willingness to save money on your part really scares me, and your willingness to put your friends and your parents in dire straights just so you can have funds makes me even more scared, and a little sad. Why are you willing to borrow money from others over and over and over until they don't want to support you anymore, when you could easily save money yourself and not have to a) depend on others and b) be a mooch? If it were me, I would be ashamed to always be begging others for payday loans, because it means I can't be self-sufficient and be a responsible adult. What are your goals in life, and how can I help you stop spending yourself into debt so you can achieve them?"
posted by These Birds of a Feather at 8:44 PM on June 13, 2013 [3 favorites]
Have you ever sat her down and had a real heart to heart with her about this? You could say something like, "Every month you get a paycheck, and every month it is completely gone and you have to borrow money from other people in order to make ends meet. I would like to know why this is, because this lack of willingness to save money on your part really scares me, and your willingness to put your friends and your parents in dire straights just so you can have funds makes me even more scared, and a little sad. Why are you willing to borrow money from others over and over and over until they don't want to support you anymore, when you could easily save money yourself and not have to a) depend on others and b) be a mooch? If it were me, I would be ashamed to always be begging others for payday loans, because it means I can't be self-sufficient and be a responsible adult. What are your goals in life, and how can I help you stop spending yourself into debt so you can achieve them?"
posted by These Birds of a Feather at 8:44 PM on June 13, 2013 [3 favorites]
I was like this, and it took me well over 10 years on my own to stop being like this. Come down hard, let her fail, let her fuck up now before she can do any serious damage. Seriously. As painful and difficult as it may be for you to possibly force her to sit out a semester because you won't bail her out, I think you should.
But also, I got zero education in money or how much the real world cost. Find her some kind of class or training or online course or something. I'm sure the main part of her problem is naivete, not willful awfulness.
posted by Lyn Never at 8:48 PM on June 13, 2013 [4 favorites]
But also, I got zero education in money or how much the real world cost. Find her some kind of class or training or online course or something. I'm sure the main part of her problem is naivete, not willful awfulness.
posted by Lyn Never at 8:48 PM on June 13, 2013 [4 favorites]
Get her a copy of On My Own Two Feet: A Modern Girl's Guide to Personal Finance. It's a corny name, but a great book. Some of the scenarios about retirement even talk about being a nonprofit worker and how you can be an idealist with a retirement plan.
posted by spunweb at 8:57 PM on June 13, 2013 [2 favorites]
posted by spunweb at 8:57 PM on June 13, 2013 [2 favorites]
My habits were built very early on, while my parents still had control of my finances. The deal was "you can't buy something until you've saved twice as much as the item you want to purchase." Realistically, it was less a lesson in "learning to save" than "learning to do without."
Modern day savings habits are more about just putting savings away the instant the paycheck arrives, and the rest of them money is the "budget" to live on.
A couple questions which you don't elaborate on:
a) What is she spending her money on? Are these living expenses, or is she just "buying stuff"?
b) How much money do you expect her to save for college? If you have an idea of an amount, say, "I expect you to save $x by this Fall. That means you need to deposit $Y of each paycheck into a savings account." And, honestly, control her savings. You have to lay claim to the money before she spends it.
posted by deanc at 9:01 PM on June 13, 2013
Modern day savings habits are more about just putting savings away the instant the paycheck arrives, and the rest of them money is the "budget" to live on.
A couple questions which you don't elaborate on:
a) What is she spending her money on? Are these living expenses, or is she just "buying stuff"?
b) How much money do you expect her to save for college? If you have an idea of an amount, say, "I expect you to save $x by this Fall. That means you need to deposit $Y of each paycheck into a savings account." And, honestly, control her savings. You have to lay claim to the money before she spends it.
posted by deanc at 9:01 PM on June 13, 2013
I'm completely with These Birds of a Feather on this. At her age, i had just moved in to my first apartment and was living exactly like this.
Two things happened that snapped me the fuck out of it. First, i lost my job. Then i ran out of money because i was blowing it all on beer and random shit. Then i ran out of friends money i could spend.
I ended up getting EBT to cover food and being otherwise completely fucking broke for a while before i found another job. Honestly, this is exactly what needs to actually happen for her to learn.
Let her make her friends tire of lending her money, let her end up in a situation where she's fucked and can't do something she really wants to(or has to, like the textbook thing above). She'll realize how much she's boning herself over when not only does she miss getting some important textbook and have to kinda-share a friends for a semester, but also doesn't get to go to that music festival out of town that all of her friends went to.
This has to actually suck for her before she'll change. There's no easy route through this i've ever seen that i feel would actually do anything. You have to fail and feel the consequences.
posted by emptythought at 9:24 PM on June 13, 2013 [1 favorite]
Two things happened that snapped me the fuck out of it. First, i lost my job. Then i ran out of money because i was blowing it all on beer and random shit. Then i ran out of friends money i could spend.
I ended up getting EBT to cover food and being otherwise completely fucking broke for a while before i found another job. Honestly, this is exactly what needs to actually happen for her to learn.
Let her make her friends tire of lending her money, let her end up in a situation where she's fucked and can't do something she really wants to(or has to, like the textbook thing above). She'll realize how much she's boning herself over when not only does she miss getting some important textbook and have to kinda-share a friends for a semester, but also doesn't get to go to that music festival out of town that all of her friends went to.
This has to actually suck for her before she'll change. There's no easy route through this i've ever seen that i feel would actually do anything. You have to fail and feel the consequences.
posted by emptythought at 9:24 PM on June 13, 2013 [1 favorite]
So, you've described what you don't like about your daughter's spending habits and how you'd like them to change ... but have you actually talked to her about them? What have y'all tried recently? Does she even know that you want this to change now? Does she see a problem with how things are? Does she know why you want her to save? A reason she cares about? More details would probably help us to give more useful responses - as it is, I think we're all projecting our own experiences onto what you've said =)
So, FWIW, here's mine:
Her attitude towards money seems to somewhat match mine at that age - an earlier poster nailed it when describing the transition between being in the headspace of "I earn it, it's my fun money!" and "I need to earn money to survive". In high school and college, I was allowed to use any money that I earned however I wished, and was aware of how lucky I was. I transitioned to being a self-supporting adult more-or-less immediately upon graduation, because that was the expectation on BOTH sides. I've had a few lean months, but certainly never crashed hard, so I don't think the tough-love let-her-fail approach that some people are encouraging is necessary in all cases.
posted by Metasyntactic at 9:44 PM on June 13, 2013 [1 favorite]
So, FWIW, here's mine:
Her attitude towards money seems to somewhat match mine at that age - an earlier poster nailed it when describing the transition between being in the headspace of "I earn it, it's my fun money!" and "I need to earn money to survive". In high school and college, I was allowed to use any money that I earned however I wished, and was aware of how lucky I was. I transitioned to being a self-supporting adult more-or-less immediately upon graduation, because that was the expectation on BOTH sides. I've had a few lean months, but certainly never crashed hard, so I don't think the tough-love let-her-fail approach that some people are encouraging is necessary in all cases.
posted by Metasyntactic at 9:44 PM on June 13, 2013 [1 favorite]
As much as I believe in the failure method of learning a lesson I don't see how you do this with partial tuition coverage w/o a repercussion far out of proportion to the goal.
Does she know you expect her to kick in for part of her tuition? If not that's a conversation you need to have with her before anything else.
I'd say the smart thing to do is set the expectation and say bluntly, I know you spend everything you have coming in so I need you to hand over $x with every paycheck and I'll bank it towards the tuition. Maybe at the end of it you actually hand back 5% so she experiences the carrot of "hey look how nice it is to have money saved."
She'll surely blow it but maybe the message will come across.
If she fails to make these deposits you'll have to come up with some repercussion you can enforce on her when the school year restarts. Since she'll have saved bupkis and will be dependent on you covering stuff that should be easy to manage. Since you're financing the education you have every moral highground on this.
Good luck. This is a hard lesson to convey. I wish my parents had been more successful in trying to get me to learn it. I'm glad they didn't kibosh my college education in the attempt; I suffered from some bad choices over the years before I got my shit together but I'd have suffered far beyond that if they'd let me drop out over it.
posted by phearlez at 9:45 PM on June 13, 2013 [3 favorites]
Does she know you expect her to kick in for part of her tuition? If not that's a conversation you need to have with her before anything else.
I'd say the smart thing to do is set the expectation and say bluntly, I know you spend everything you have coming in so I need you to hand over $x with every paycheck and I'll bank it towards the tuition. Maybe at the end of it you actually hand back 5% so she experiences the carrot of "hey look how nice it is to have money saved."
She'll surely blow it but maybe the message will come across.
If she fails to make these deposits you'll have to come up with some repercussion you can enforce on her when the school year restarts. Since she'll have saved bupkis and will be dependent on you covering stuff that should be easy to manage. Since you're financing the education you have every moral highground on this.
Good luck. This is a hard lesson to convey. I wish my parents had been more successful in trying to get me to learn it. I'm glad they didn't kibosh my college education in the attempt; I suffered from some bad choices over the years before I got my shit together but I'd have suffered far beyond that if they'd let me drop out over it.
posted by phearlez at 9:45 PM on June 13, 2013 [3 favorites]
The way my mom did it with me was to sit down and make me work out a budget of what all my expenses would be if I moved out. I had no clue about phones requiring a deposit or really thinking about electric bills. I just thought rent was $$$.$$ and that was it. Then she started in on having to buy pots and pans, towels, cleaning supplies. It was an unpleasant but eye opening experience.
I don't think you have a shot this year of your kid paying any college expenses unless you take control of her finances for now. My thoughts are make this a learning year. Pay for needs like tuition, housing and meal plans (needs) but the only money she gets for wants are what ever she saves from now until school starts. Have her sit down and write down what she thinks her expenses will be and how much this fall. Then helpfully point out all that she's forgotten. An unpleasant freshman year of not having money to buy fun stuff or go out with friends will make an impression. Next summer come up with a savings amount she needs to pay out of each check. In the real world, she'll have bills. This will help her get use to it.
It's a pain for you but I'm not a fan of throwing someone in the deep end and hoping for the best. People have to learn to manage money. I've known way to many people who suck at it and go way in debt. Bankruptcy and being poor was their option but it's much harder now. They still suck at it years later if not quite as badly.
Take the time to teach her with unpleasant but safe consequences for failure. If it still doesn't work, then you can let her sink or swim on her own but right now she has no real skills or understanding of consequences of being bad with money. Oh, if at all possible, convince her to put a freeze on her credit so it's harder for her to get a credit card. This will save her years of pain.
posted by stray thoughts at 9:47 PM on June 13, 2013 [4 favorites]
I don't think you have a shot this year of your kid paying any college expenses unless you take control of her finances for now. My thoughts are make this a learning year. Pay for needs like tuition, housing and meal plans (needs) but the only money she gets for wants are what ever she saves from now until school starts. Have her sit down and write down what she thinks her expenses will be and how much this fall. Then helpfully point out all that she's forgotten. An unpleasant freshman year of not having money to buy fun stuff or go out with friends will make an impression. Next summer come up with a savings amount she needs to pay out of each check. In the real world, she'll have bills. This will help her get use to it.
It's a pain for you but I'm not a fan of throwing someone in the deep end and hoping for the best. People have to learn to manage money. I've known way to many people who suck at it and go way in debt. Bankruptcy and being poor was their option but it's much harder now. They still suck at it years later if not quite as badly.
Take the time to teach her with unpleasant but safe consequences for failure. If it still doesn't work, then you can let her sink or swim on her own but right now she has no real skills or understanding of consequences of being bad with money. Oh, if at all possible, convince her to put a freeze on her credit so it's harder for her to get a credit card. This will save her years of pain.
posted by stray thoughts at 9:47 PM on June 13, 2013 [4 favorites]
Two accounts.
Bills 1+2+3 are gonna be ~$xxx every month. That money goes into the BILLS account, automatically if at all possible.
Everything else goes into the SPENDING account. Spend that too fast and life's gonna be boring, but at least you'll still be able to pay the bills.
posted by itheearl at 9:54 PM on June 13, 2013 [3 favorites]
Bills 1+2+3 are gonna be ~$xxx every month. That money goes into the BILLS account, automatically if at all possible.
Everything else goes into the SPENDING account. Spend that too fast and life's gonna be boring, but at least you'll still be able to pay the bills.
posted by itheearl at 9:54 PM on June 13, 2013 [3 favorites]
what does she think about all of this? does she resent your influence, is she indifferent, or does she appreciate the attention your paying her? it really matters for the type of advice i could give.
i suppose in general you want her to be more financially "responsible" and you try to operationalize it with the examples you give in your question.
do you expect her to make a material contribution to paying tuition, or just a token amount? do you really understand how much she's making (after taxes), how much her rent, and other basic expenses cost? because ... i don't think your daughter is making very much money, given that she's still in college. even if she's working full time. the amount of money she could save in just a summer does not begin to make a dent in college tuition. so, all of this makes me think you just want some token contribution for her so she "has some skin in the game."
and all that is fine, but, what does she think about it?
posted by cupcake1337 at 10:08 PM on June 13, 2013 [1 favorite]
i suppose in general you want her to be more financially "responsible" and you try to operationalize it with the examples you give in your question.
do you expect her to make a material contribution to paying tuition, or just a token amount? do you really understand how much she's making (after taxes), how much her rent, and other basic expenses cost? because ... i don't think your daughter is making very much money, given that she's still in college. even if she's working full time. the amount of money she could save in just a summer does not begin to make a dent in college tuition. so, all of this makes me think you just want some token contribution for her so she "has some skin in the game."
and all that is fine, but, what does she think about it?
posted by cupcake1337 at 10:08 PM on June 13, 2013 [1 favorite]
As a 20-year-old who sucks (but is getting better) at saving, I've found Simple Bank to be a godsend, after giving over a thousand dollars to Chase in overdraft fees in the like, I've actually been able to save money.
It's really a fundamentally different way of dealing with a banking institution and it makes it really easy to save. Instead of showing your account balance, it shows you what's "safe to spend", and you can put in your regular expenses so that you're not spending money that's really meant for other things (which was my problem).
PM me if you need an invite.
posted by ejfox at 11:59 PM on June 13, 2013 [1 favorite]
It's really a fundamentally different way of dealing with a banking institution and it makes it really easy to save. Instead of showing your account balance, it shows you what's "safe to spend", and you can put in your regular expenses so that you're not spending money that's really meant for other things (which was my problem).
PM me if you need an invite.
posted by ejfox at 11:59 PM on June 13, 2013 [1 favorite]
I wouldn't go 'just let her fail' yet. She's now old enough to get herself into serious credit card debt without trying too hard.
Talk to her about your expectations for how much she needs to contribute, then get it off her every pay. Dole it out to her throughout the year like a paycheck. Slowly taper off the amount of control over the next four years, and hopefully she'll be better at money before she graduates.
And definitely sit down and do a budget (or a bunch of budgets) with her.
posted by kjs4 at 12:11 AM on June 14, 2013 [1 favorite]
Talk to her about your expectations for how much she needs to contribute, then get it off her every pay. Dole it out to her throughout the year like a paycheck. Slowly taper off the amount of control over the next four years, and hopefully she'll be better at money before she graduates.
And definitely sit down and do a budget (or a bunch of budgets) with her.
posted by kjs4 at 12:11 AM on June 14, 2013 [1 favorite]
But if you do want to go hard-core, look into the procedures for deferring her course for a semester. Deferring isn't the end of the world, but is a natural consequence for being broke, and almost certainly something she will want to avoid.
posted by kjs4 at 12:15 AM on June 14, 2013
posted by kjs4 at 12:15 AM on June 14, 2013
Tell her you will add to any money that she gives you to save, so that she gets a much higher guaranteed rate of interest (more like matching funds) from the Parent Bank than she would get from any regular bank.
If she hands you 100 dollars to save now, you guarantee to give her a lot more (120? 150? 200?) back at the end of the required savings period (a year?). I don't know how much it would have to be to entice her into saving, but make it high enough (if you can afford it) that she will have to go for it. And if she wants it back earlier, she loses money. Instead of the original 100, she gets back 90 if she wants it early.
posted by pracowity at 2:01 AM on June 14, 2013
If she hands you 100 dollars to save now, you guarantee to give her a lot more (120? 150? 200?) back at the end of the required savings period (a year?). I don't know how much it would have to be to entice her into saving, but make it high enough (if you can afford it) that she will have to go for it. And if she wants it back earlier, she loses money. Instead of the original 100, she gets back 90 if she wants it early.
posted by pracowity at 2:01 AM on June 14, 2013
I understand your instinct to make her more rather than less responsible. Being the place she saves or forcing her to save won't achieve this though. For me, turning 18 and heading to university was the time I became responsible for my own money. My parents let me know that they would cover X, in my case rent costs for the year, after that it was on me (I'm in the UK and this was a while ago so you may need to adjust to include tuition). Any other money I needed I would have to earn.
The first summer before I left they added an incentive for me to save a little lump sum by offering to match what I made over the 3 months. This was a one time deal only but I think they had been planning to give me a lump to see me off and this seemed like a good way to do it. I remember they were a little surprised by how much I saved, I worked 25-35 hour weeks as a waitress all summer knowing I'd get paid double. Really a nice problem for them to have, though.
This feeling that I am ultimately responsible was invaluable to me. I hated wasting money that I'd earned and I am still very fiscally responsible. This was a great lesson from my parents.
posted by Dorothia at 2:35 AM on June 14, 2013 [1 favorite]
The first summer before I left they added an incentive for me to save a little lump sum by offering to match what I made over the 3 months. This was a one time deal only but I think they had been planning to give me a lump to see me off and this seemed like a good way to do it. I remember they were a little surprised by how much I saved, I worked 25-35 hour weeks as a waitress all summer knowing I'd get paid double. Really a nice problem for them to have, though.
This feeling that I am ultimately responsible was invaluable to me. I hated wasting money that I'd earned and I am still very fiscally responsible. This was a great lesson from my parents.
posted by Dorothia at 2:35 AM on June 14, 2013 [1 favorite]
Tell her that you will only match what she saves.
On preview, what Dorothia says.
posted by rpfields at 3:18 AM on June 14, 2013 [1 favorite]
On preview, what Dorothia says.
posted by rpfields at 3:18 AM on June 14, 2013 [1 favorite]
Have her set up her direct deposit so x goes into savings and y goes into checking, and have yourself set up as a payee who gets paid x amount automatically following her deposits. Letting her fail shouldn't mean dropping out of school or not having books, it should mean being broke/hungry between paychecks when she doesn't budget, and eating every day when she does.
posted by headnsouth at 4:17 AM on June 14, 2013 [1 favorite]
posted by headnsouth at 4:17 AM on June 14, 2013 [1 favorite]
Just tell her that you will not be giving her spending money in the fall and give her a set amount she must pay towards tuition. Then...that's it. You can't want it more than she does and you can't cave in when (sorry, if) she fails.
I am very cautious with money because I don't have a safety net- if it's gone, it's gone.
If she chooses to give up her four year university then it's her choice. Pick the amount, tell her and then that's it. It just seems like you are the only one worried about the consequences. If she doesn't care enough to bother saving, why should you have to cover the difference?
posted by bquarters at 4:22 AM on June 14, 2013
I am very cautious with money because I don't have a safety net- if it's gone, it's gone.
If she chooses to give up her four year university then it's her choice. Pick the amount, tell her and then that's it. It just seems like you are the only one worried about the consequences. If she doesn't care enough to bother saving, why should you have to cover the difference?
posted by bquarters at 4:22 AM on June 14, 2013
She now has an idea about how financial freedom feels since she has all that spending money and no responsibilities. She needs to LEARN about the responsibilities. Maybe you've been on this for the last few years and she just ignores it, or maybe you assumed she would pick it up on the go but she didn't. Enroll her in your money summer class if you so will, an ongoing weekly sit down where you work through some important lessons.
You need to help her to assign value to all the things and services she uses, they don't come for free but she might not realize it at this point.
Let her make a budget and map out all the expenses. Let her prioritize the points and divide them in wants and needs.
The first rule about saving is "spend less than you earn" - she does not have that one down yet. This cycle she is in now (spending everything within days of getting her paycheck and borrowing from friends) is not sustainable - make her understand why.
Set financial goals for short-term, mid-term and long-term. Determine how much those goals cost and how much she needs to save each week/month to achieve a goal without having to borrow for it. Let her prioritize here as well, often we concentrate on saving for one thing first before we move to the other. You can teach her about automatic deposits into a savings account on payday. You may want to consider a greater incentive, like matching her savings or some reward if she manages to save $x. Teach her about interest and compound interest and how it accumulates over the years.
Make sure to include a talk about emergency savings as well. Even little things like unexpected fees at the library, fees for paying bills too late or for overdaft can make a big dent in a small budget.
Make her understand that paying on time is not only to prevent additional fees but also to build a good credit history. Her friends might be forgiving if she is late in paying them back, that won't be the case with formal loans. Explain why good credit scores and history are important.
I bet she feels like she is doing everything right, working hard all year so she deserves the fun. And to a certain degree she does - her main job is earning that degree so she should be able to enjoy some fun things during the summer.
But make her understand where you are coming from. Break your own budget down and explain where you expect her to pitch in and why. You might assign her specific bills (cell phone, insurance, groceries) or ask her for $x that goes towards your expenses for her.
Work on her spending and how to slow it down (what things does she really need, what stuff does make her feel rewarded for all her work and which purchases are actually not that important). If she feels like she came up with a good plan herself vs. "my parents took away all my money" the lesson is more likely to stick.
I would always start with a teaching approach.
The thing is, she's 19 and might know all of the above already and just enjoy the freedom you allow her to have. Most people learn good money habits step by step throughout their teens and not by failing disastrously as young adults.
posted by travelwithcats at 5:03 AM on June 14, 2013
You need to help her to assign value to all the things and services she uses, they don't come for free but she might not realize it at this point.
Let her make a budget and map out all the expenses. Let her prioritize the points and divide them in wants and needs.
The first rule about saving is "spend less than you earn" - she does not have that one down yet. This cycle she is in now (spending everything within days of getting her paycheck and borrowing from friends) is not sustainable - make her understand why.
Set financial goals for short-term, mid-term and long-term. Determine how much those goals cost and how much she needs to save each week/month to achieve a goal without having to borrow for it. Let her prioritize here as well, often we concentrate on saving for one thing first before we move to the other. You can teach her about automatic deposits into a savings account on payday. You may want to consider a greater incentive, like matching her savings or some reward if she manages to save $x. Teach her about interest and compound interest and how it accumulates over the years.
Make sure to include a talk about emergency savings as well. Even little things like unexpected fees at the library, fees for paying bills too late or for overdaft can make a big dent in a small budget.
Make her understand that paying on time is not only to prevent additional fees but also to build a good credit history. Her friends might be forgiving if she is late in paying them back, that won't be the case with formal loans. Explain why good credit scores and history are important.
I bet she feels like she is doing everything right, working hard all year so she deserves the fun. And to a certain degree she does - her main job is earning that degree so she should be able to enjoy some fun things during the summer.
But make her understand where you are coming from. Break your own budget down and explain where you expect her to pitch in and why. You might assign her specific bills (cell phone, insurance, groceries) or ask her for $x that goes towards your expenses for her.
Work on her spending and how to slow it down (what things does she really need, what stuff does make her feel rewarded for all her work and which purchases are actually not that important). If she feels like she came up with a good plan herself vs. "my parents took away all my money" the lesson is more likely to stick.
I would always start with a teaching approach.
The thing is, she's 19 and might know all of the above already and just enjoy the freedom you allow her to have. Most people learn good money habits step by step throughout their teens and not by failing disastrously as young adults.
posted by travelwithcats at 5:03 AM on June 14, 2013
You can be a safety net without giving her money. Stop giving her money. You can let her stay at your place (for a limited time and she must contribute by doing chores) and you can bring her a meal, but just stop giving her money. It's that easy! You could better her chances of not doing something stupid with credit cards by teaching her about finances or paying for her to have a session with a financial planner, but really, she'll never learn if you keep giving her money.
posted by WeekendJen at 5:55 AM on June 14, 2013
posted by WeekendJen at 5:55 AM on June 14, 2013
When I read your query, OP, I can't figure out if you have truly had this conversation with your child, and if so, with what details (an amount? an agreement? an order), so I'm a bit in the dark with this answer. I'm going to try to approach this from a different direction, and this was from both teaching university students in the past, and watching my own friends (as undergrad or grad students) make very different decisions.
Please understand that this is not meant to be patronizing, but again, I can't tell what you did in the past, so the answer may be more basic.
If I had a child in this position, the following conversation would happen, along with the rationale:
• Ask your child to define: Where do you imagine yourself 4 years from now? Is college part of this plan? The reason that this should be part of the conversation is - I have experienced having students never show up to the first day of class and for the entire semester (and they don't show up to their other classes). They never wanted to go to college. A few students make the decision in advance, and although there is fallout, their goal was to do something else.We don't hear about these students - but a parent decides college is the best option and tries to send them there.
• Ask your child to define: If college is part of the plan, which option have you selected and why? What is the cost of this particular option? Some states (CA) have great community college programs that applies directly towards university education and is far cheaper. Local state schools are often far cheaper than a university in a different state, and then fancy pants private uni big name school costs a hell of a lot. There is no wrong or right answer, but it is a decision to make. If she selects the more expensive options, does she know of the benefits and plan to use it? How does she plan to pay for the disproportionately higher tuition?
• Let her know about possible options in the future if she follows degree A or B (i.e. as an undergrad in the sciences, I had no idea that grad school could be tuition and living expense free- I wasted a few years post undergrad thinking that I had to save it all up. I wish that I had had the conversation with someone along the way. But this was my Achilles heel...).
• Teach your child the cost associated with life style in college. Things like college books are exorbitant, and unless you go through a semester paying for this, you will have no idea....If your child has not gone to college yet,it seems odd to expect someone to have this knowledge.
• Ask your child how she plans to pay for part of this. There are many options, but perhaps she has already made other decisions. I knew people who went to the military first to get a tuition benefit years later, or just chose to work in college and get massive loans. But they made these decisions. I wonder if your child may have made some of these decisions already (i.e. loans), and hence is not worried.
• Give her a gift appointment or two with a financial planner. This is an aside, but one of my closest friends was a refugee from another country. His parents were in no place to possibly help with any part of college. Believe it or not, as an undergrad he paid to see a financial planner at that time. The planner even showed him things like the need to save for retirement, how much the average person would need, and what steps he should take as an 18 year old to get to those points. So, believe it or not, this friend decided to go with fancy pants school, but work study, school loan, and the loan covered money to be saved towards retirement. This friend is far ahead of many people I know because of what he learned from this appointment with a financial planner many, many years ago.
posted by Wolfster at 6:24 AM on June 14, 2013 [2 favorites]
Please understand that this is not meant to be patronizing, but again, I can't tell what you did in the past, so the answer may be more basic.
If I had a child in this position, the following conversation would happen, along with the rationale:
• Ask your child to define: Where do you imagine yourself 4 years from now? Is college part of this plan? The reason that this should be part of the conversation is - I have experienced having students never show up to the first day of class and for the entire semester (and they don't show up to their other classes). They never wanted to go to college. A few students make the decision in advance, and although there is fallout, their goal was to do something else.We don't hear about these students - but a parent decides college is the best option and tries to send them there.
• Ask your child to define: If college is part of the plan, which option have you selected and why? What is the cost of this particular option? Some states (CA) have great community college programs that applies directly towards university education and is far cheaper. Local state schools are often far cheaper than a university in a different state, and then fancy pants private uni big name school costs a hell of a lot. There is no wrong or right answer, but it is a decision to make. If she selects the more expensive options, does she know of the benefits and plan to use it? How does she plan to pay for the disproportionately higher tuition?
• Let her know about possible options in the future if she follows degree A or B (i.e. as an undergrad in the sciences, I had no idea that grad school could be tuition and living expense free- I wasted a few years post undergrad thinking that I had to save it all up. I wish that I had had the conversation with someone along the way. But this was my Achilles heel...).
• Teach your child the cost associated with life style in college. Things like college books are exorbitant, and unless you go through a semester paying for this, you will have no idea....If your child has not gone to college yet,it seems odd to expect someone to have this knowledge.
• Ask your child how she plans to pay for part of this. There are many options, but perhaps she has already made other decisions. I knew people who went to the military first to get a tuition benefit years later, or just chose to work in college and get massive loans. But they made these decisions. I wonder if your child may have made some of these decisions already (i.e. loans), and hence is not worried.
• Give her a gift appointment or two with a financial planner. This is an aside, but one of my closest friends was a refugee from another country. His parents were in no place to possibly help with any part of college. Believe it or not, as an undergrad he paid to see a financial planner at that time. The planner even showed him things like the need to save for retirement, how much the average person would need, and what steps he should take as an 18 year old to get to those points. So, believe it or not, this friend decided to go with fancy pants school, but work study, school loan, and the loan covered money to be saved towards retirement. This friend is far ahead of many people I know because of what he learned from this appointment with a financial planner many, many years ago.
posted by Wolfster at 6:24 AM on June 14, 2013 [2 favorites]
If she chooses to give up her four year university then it's her choice.
I feel like this is decent advice for someone whose family is rather poor or relatively well off: in the first case, the child will be no worse off than she is now if she fails to finish college, she will merely give up an option, while the family could be severely hurt financially by continuing to support the child and try to bail her out. In the latter case, the child has a socio-economic safety net that will keep her afloat regardless and the family isn't going to suffer too much if they later provide support when the child gets on her feet and figures out what she wants.
It is that middle case where the consequences for the child will be severe if she doesn't make it through college and the parents can't simply help her pick up where she left off later on after she's learned "some hard lessons" where finishing college is probably much more of a priority than learning a specific aesthetic of money management under sink-or-swim conditions.
I think this is a situation where not finishing college is not an option, and to do this, the parent needs to take closer control/supervision of the child's finances (yes, "helicoptering") to make this happen. She can always learn better financial skills in parallel to this over time. The training wheels are going to stay on a little longer, but I think there is nothing wrong with that.
posted by deanc at 6:37 AM on June 14, 2013 [1 favorite]
I feel like this is decent advice for someone whose family is rather poor or relatively well off: in the first case, the child will be no worse off than she is now if she fails to finish college, she will merely give up an option, while the family could be severely hurt financially by continuing to support the child and try to bail her out. In the latter case, the child has a socio-economic safety net that will keep her afloat regardless and the family isn't going to suffer too much if they later provide support when the child gets on her feet and figures out what she wants.
It is that middle case where the consequences for the child will be severe if she doesn't make it through college and the parents can't simply help her pick up where she left off later on after she's learned "some hard lessons" where finishing college is probably much more of a priority than learning a specific aesthetic of money management under sink-or-swim conditions.
I think this is a situation where not finishing college is not an option, and to do this, the parent needs to take closer control/supervision of the child's finances (yes, "helicoptering") to make this happen. She can always learn better financial skills in parallel to this over time. The training wheels are going to stay on a little longer, but I think there is nothing wrong with that.
posted by deanc at 6:37 AM on June 14, 2013 [1 favorite]
Response by poster: Wow, people surely do have strong opinions. Thank you all for your thoughts.
As I mentioned in the OP, letting her drop out of school because she can't save money is absolutely NOT an option for me. She attends a small liberal arts school that costs $50,000 / year, and losing that is simply not ok for me. At the end of four years, she might be broke or in debt, but she will have significant earnings potential that she doesn't have now.
To answer some of your questions:
- Yes, I've tried to have plenty of conversations about money with her. She rarely engages in them. She mostly goes blank. I've tried "let's sit down and make a budget together" or "let's really talk about what it's costing to go to school" or "why don't you come up with a plan and then let's talk about it" or "I'm just going to make the decisions for you" --- all have not worked.
- The amount that she needs to contribute to school is not a token or trivial amount. I'm not doing it to "teach her a lesson" or something. She has significant financial aid and scholarships that cover most of the cost of attendance. What's left is about $6k / year + spending money, of which she needs to contribute at 1/3 to 1/2.
- I don't give her money. (This is why she borrows money from friends.) I ran out of sympathy a long time ago for the "but I didn't realize X was going to happen, so I didn't save" argument. I do pay for her food when she's home and her cell phone.
- She's likely to make between $3k and $4k this summer at a biology lab. I can easily take what I need from her checking account to go towards tuition, but how do I make sure that she just doesn't spend the rest within 3 days of her showing up to school? From the advice here, it sounds like I need to take it all and then dole it out to her on a schedule. I did that last year, and I can do it again.
Thanks again for all of your thoughts.
posted by frizz at 8:05 AM on June 14, 2013 [1 favorite]
As I mentioned in the OP, letting her drop out of school because she can't save money is absolutely NOT an option for me. She attends a small liberal arts school that costs $50,000 / year, and losing that is simply not ok for me. At the end of four years, she might be broke or in debt, but she will have significant earnings potential that she doesn't have now.
To answer some of your questions:
- Yes, I've tried to have plenty of conversations about money with her. She rarely engages in them. She mostly goes blank. I've tried "let's sit down and make a budget together" or "let's really talk about what it's costing to go to school" or "why don't you come up with a plan and then let's talk about it" or "I'm just going to make the decisions for you" --- all have not worked.
- The amount that she needs to contribute to school is not a token or trivial amount. I'm not doing it to "teach her a lesson" or something. She has significant financial aid and scholarships that cover most of the cost of attendance. What's left is about $6k / year + spending money, of which she needs to contribute at 1/3 to 1/2.
- I don't give her money. (This is why she borrows money from friends.) I ran out of sympathy a long time ago for the "but I didn't realize X was going to happen, so I didn't save" argument. I do pay for her food when she's home and her cell phone.
- She's likely to make between $3k and $4k this summer at a biology lab. I can easily take what I need from her checking account to go towards tuition, but how do I make sure that she just doesn't spend the rest within 3 days of her showing up to school? From the advice here, it sounds like I need to take it all and then dole it out to her on a schedule. I did that last year, and I can do it again.
Thanks again for all of your thoughts.
posted by frizz at 8:05 AM on June 14, 2013 [1 favorite]
Agree with stop paying for cell phone. It is a benefit from you that she doesn't deserve because of her distasteful behaviour. I don't think there is much direct action you could do besides that, except offering a savings match that would equal the cost of the cell phone bill.
One other more future looking thing: give her a date for when you expect her to move out (may be years away, and relative to the completion date of college). Hand her a paper that shows her the list of items she will need to get started on her own - deposits, household goods, automotive/bike if necessary, etc. Also give her a paper that explains average running cost of running said household monthly. Tell her that it's her job to be prepared financially for the day that it will happen. You may remind her that this day is coming periodically and offer to help her become ready for that day. And then on the day you specify - kick her out. Stay true to your word on that. She'd figure it out.
posted by crazycanuck at 9:29 AM on June 14, 2013 [1 favorite]
One other more future looking thing: give her a date for when you expect her to move out (may be years away, and relative to the completion date of college). Hand her a paper that shows her the list of items she will need to get started on her own - deposits, household goods, automotive/bike if necessary, etc. Also give her a paper that explains average running cost of running said household monthly. Tell her that it's her job to be prepared financially for the day that it will happen. You may remind her that this day is coming periodically and offer to help her become ready for that day. And then on the day you specify - kick her out. Stay true to your word on that. She'd figure it out.
posted by crazycanuck at 9:29 AM on June 14, 2013 [1 favorite]
She rarely engages in them. She mostly goes blank. I've tried "let's sit down and make a budget together" or "let's really talk about what it's costing to go to school" or "why don't you come up with a plan and then let's talk about it" or "I'm just going to make the decisions for you" --- all have not worked.
This was exactly me when I was her age.
Then I wanted to transfer colleges, and the upshot was that my family would facilitate that if instead of them completely funding my life and handling all the details, the arrangement would be that they paid my tuition, mandatory school related costs like textbooks, and gave me a small stipend for living expenses. I was the one combining that stipend with whatever I could earn to pay rent, bills, groceries, etc. They left it to me to house myself, decide what utilities and services I wanted in my life, what I wanted to eat, etc.
There was a period of time that I didn't prioritize well and "failed" a little bit. I decided I'd rather not pay a cell phone bill, so I just didn't have a phone for a while, which sucked, but it was what I wanted. There were months I ate only macaroni and cheese. There were months I walked to school and work rather than pay for transit. Later, there were times I didn't pay a bill and a service got cut off, or opportunities I lost out on because I failed to have the foresight to save, or small amounts of debt racked up because I didn't have an emergency fund. None of this ruined my life. Each of these "failures" was character building and helped me to develop a better relationship to money.
I don't think you necessarily need to get this nuclear with your daughter (and going to a liberal arts school in a small town makes the above plan harder than going to a state school in a big city), but I do think letting her fail on small things like a phone bill or a bus pass is going to be good for her and probably more worthwhile than making her take a personal finance class she'll just blow off.
posted by Sara C. at 10:15 AM on June 14, 2013 [2 favorites]
This was exactly me when I was her age.
Then I wanted to transfer colleges, and the upshot was that my family would facilitate that if instead of them completely funding my life and handling all the details, the arrangement would be that they paid my tuition, mandatory school related costs like textbooks, and gave me a small stipend for living expenses. I was the one combining that stipend with whatever I could earn to pay rent, bills, groceries, etc. They left it to me to house myself, decide what utilities and services I wanted in my life, what I wanted to eat, etc.
There was a period of time that I didn't prioritize well and "failed" a little bit. I decided I'd rather not pay a cell phone bill, so I just didn't have a phone for a while, which sucked, but it was what I wanted. There were months I ate only macaroni and cheese. There were months I walked to school and work rather than pay for transit. Later, there were times I didn't pay a bill and a service got cut off, or opportunities I lost out on because I failed to have the foresight to save, or small amounts of debt racked up because I didn't have an emergency fund. None of this ruined my life. Each of these "failures" was character building and helped me to develop a better relationship to money.
I don't think you necessarily need to get this nuclear with your daughter (and going to a liberal arts school in a small town makes the above plan harder than going to a state school in a big city), but I do think letting her fail on small things like a phone bill or a bus pass is going to be good for her and probably more worthwhile than making her take a personal finance class she'll just blow off.
posted by Sara C. at 10:15 AM on June 14, 2013 [2 favorites]
Have her sign up for Mint.
I sat down with my brother when we were both together over Christmas and got him all set up, and had him start going back and categorizing all of his expenses.
Within about 3 minutes, this is what he said: "shit, I spend a lot on beer."
And within about another 2 minutes: "shit, I spend a lot on fast food breakfast."
And within about another 30 seconds: "shit, man, I waste a lot of money."
posted by phunniemee at 11:14 AM on June 14, 2013 [5 favorites]
I sat down with my brother when we were both together over Christmas and got him all set up, and had him start going back and categorizing all of his expenses.
Within about 3 minutes, this is what he said: "shit, I spend a lot on beer."
And within about another 2 minutes: "shit, I spend a lot on fast food breakfast."
And within about another 30 seconds: "shit, man, I waste a lot of money."
posted by phunniemee at 11:14 AM on June 14, 2013 [5 favorites]
She's likely to make between $3k and $4k this summer at a biology lab. I can easily take what I need from her checking account to go towards tuition, but how do I make sure that she just doesn't spend the rest within 3 days of her showing up to school?
If you make sure the tuition-specific stuff isn't blown and you're just talking about other expenses then what's the downside of this happening? I know you want her to be better about this but the question is whether this:
From the advice here, it sounds like I need to take it all and then dole it out to her on a schedule. I did that last year, and I can do it again.
Has the result of helping her get better about it, has a counter result/impedes learning, or has no result at all.
I'm not sure how you structure that such that it helps. I'm not convinced it impedes learning, though it may delay it. But delaying till the result is less drastic may be better. If it has no result either way and makes her school life better then I'd say it's a definite.
posted by phearlez at 2:06 PM on June 14, 2013
If you make sure the tuition-specific stuff isn't blown and you're just talking about other expenses then what's the downside of this happening? I know you want her to be better about this but the question is whether this:
From the advice here, it sounds like I need to take it all and then dole it out to her on a schedule. I did that last year, and I can do it again.
Has the result of helping her get better about it, has a counter result/impedes learning, or has no result at all.
I'm not sure how you structure that such that it helps. I'm not convinced it impedes learning, though it may delay it. But delaying till the result is less drastic may be better. If it has no result either way and makes her school life better then I'd say it's a definite.
posted by phearlez at 2:06 PM on June 14, 2013
thanks for the update.
first, you can't just take her money because that would be stealing, even if you are her parent and you have the best intentions. if she gives you her money that would be different, but given her attitude, i doubt she'd fall for it.
What's left is about $6k / year + spending money, of which she needs to contribute at 1/3 to 1/2.
i say you should pay for her tuition, and she can pay for her walking around money. i think you've really got to let her learn by failing with this thing. she'll have her tuition paid so she'll still be able to go to college. it won't be fun for her, but she won't starve.
posted by cupcake1337 at 4:38 PM on June 14, 2013 [1 favorite]
first, you can't just take her money because that would be stealing, even if you are her parent and you have the best intentions. if she gives you her money that would be different, but given her attitude, i doubt she'd fall for it.
What's left is about $6k / year + spending money, of which she needs to contribute at 1/3 to 1/2.
i say you should pay for her tuition, and she can pay for her walking around money. i think you've really got to let her learn by failing with this thing. she'll have her tuition paid so she'll still be able to go to college. it won't be fun for her, but she won't starve.
posted by cupcake1337 at 4:38 PM on June 14, 2013 [1 favorite]
Ah, your update makes me realize I had a completely different idea of what was going on. (For one, I thought she as just starting university, since that the age people started when I was going to school.)
I think you need to cut her off. Tell her now you are only going to contribute half of the $6,000 she needs for school in the fall and that she needs to come up with the rest plus all her spending money. A slightly softer approach might be to tell her she needs to come up with half, and then commit to giving her a small amount each month--like, enough to cover basic groceries but no more. I don't know what it's like now, but students were very creative when I was in school when it came to eating on no money. Even on a very minimal amount, she won't starve.
I think you're right to not want her to bomb out of a degree that could increase her earning potential. But if she finishes with a bunch of debt and having not learned to spend and save wisely, then she's really going to be set up for a terrible situation. It's one thing to blow through $4,000 in a summer and borrow drinking money from friends all school year. It's another thing altogether to squander away a $74K yearly salary and rack up tens of thousands in credit card debt. Earning more money if she's bad at managing it could end up being worse for her in the long run.
posted by looli at 1:57 PM on June 15, 2013
I think you need to cut her off. Tell her now you are only going to contribute half of the $6,000 she needs for school in the fall and that she needs to come up with the rest plus all her spending money. A slightly softer approach might be to tell her she needs to come up with half, and then commit to giving her a small amount each month--like, enough to cover basic groceries but no more. I don't know what it's like now, but students were very creative when I was in school when it came to eating on no money. Even on a very minimal amount, she won't starve.
I think you're right to not want her to bomb out of a degree that could increase her earning potential. But if she finishes with a bunch of debt and having not learned to spend and save wisely, then she's really going to be set up for a terrible situation. It's one thing to blow through $4,000 in a summer and borrow drinking money from friends all school year. It's another thing altogether to squander away a $74K yearly salary and rack up tens of thousands in credit card debt. Earning more money if she's bad at managing it could end up being worse for her in the long run.
posted by looli at 1:57 PM on June 15, 2013
« Older How do I respond to my preteen cousin's anxiety... | How can I nip a depressive episode in the bud? Newer »
This thread is closed to new comments.
The time to fail is safely in college, the money skills people learn or don't learn then seem to follow them throughout their lives.
posted by bottlebrushtree at 8:14 PM on June 13, 2013 [2 favorites]