School and Money- College Finances
Assign Budgets to Kids When They Are Younger
My niece sat in the kitchen chair, looking at me with a wide smile crossing her face.
"I get to do the grocery shopping next week, and I get to keep all of the leftover money for me and my sister?"
"There are conditions. You have to get everything on the list, you cannot change where certain name brands are written in, you have to choose a grocery store within 10 miles of here and finally, you have to have your plan of how to save money given to your mom by this Friday."
"Done! I can do it! I won't let you guys down!" My niece was practically shrieking as she ran into her room to share the niece of her fortune.
"Are you going to make the menu?" I asked my sister.
"The first few times." She replied.
Shopping the first week was amazingly hard. Armed with a calculator, a list and a foggy idea of how taxes work, my niece and her sister got to keep $12.00 for the both of them. They were thrilled with the money.
Since that first time of shopping, junk food began to stop going in the grocery cart as both girls saw that as money that could be used for themselves. Adding coupons and super sales to the mix was a way to bring more money to their pockets.
Now, shoppers for several years, my nieces will call my sister if there is a great sale going on so that they can stock up. Assigning reality to how far a dollar goes is a valuable tool for your child/ren.
Charge for Loans and Advances-With Interest
My son fell short on his allowance one week and needed an advance.
"I need five more dollars this week" was how the conversation started.
"I will give you the five dollars, but you will have it deducted from your allowance, and it will cost either ten percent interest, or it will cost one chore you hate. My choice. Are we in agreement?"
"Yes. I need the money, Mom."
My son now had his first loan that was with interest. He has never borrowed money from me since then without interest. Why? Because I want him to have fiscal responsibility. If you get a loan from a bank, you pay interest. When your child gets loans from school, they will have to pay them back in most cases with interest fees attached.
When you give your children money without them earning it, you are teaching them that money simply comes from your wallet. Charging interest makes them think about the consequences of borrowing.
Financing School Activities
No matter whether it is sports, band, art or anything else, activities cost money.
When my child wanted to be a part of any extracurricular activity, we had a talk. If he was under the age of 16, the legal age to work in my state, we made a deal. I would look at the amount of money that he was needing and determine if our household budget could afford it.
If I could afford what he wanted to do, we signed a contract where he agreed to perform certain chores to earn his "half" of the purchase. If he was over 16, then he was to pay half and so was I. Either way, by him paying for it in either deeds or money, my son appreciated what things he had, and he took much better care of his things and made it a point to make it to all of the practices and rehearsals. He had a vested interest, because it was also his time and money that were being spent. Additionally, if he wanted to drop something, he was still liable to me for the money or services that were agreed upon.
College and Kids Spending Habits
College is very hard on the kid and the parent when it comes to money. The best advice I was ever given was to check in weekly with your child, but let them create their successes and failures. Don't bail them out when they overspend. Let them understand what happens when you make poor financial decisions.
Don't ever send large amounts of money to your child for tuition. Ask the school how to pay them directly. Make sure that you get receipts for everything.
If you are sending money for food for your child, take a trip with them and compare the prices of groceries between your home grocery store and the grocery store they are shopping at.
If you are concerned about them having gas for their car, get a gas gift card that is only good at the pump.
Ask for receipts for everything that you send money for. Don't allow a child to say "I forgot." When my son forgot receipts one month, I forgot to mail him a check the next month. He never forgot again.
Having a Job While In College
My son wanted to go to concerts, spend time with friends and study. I explained that we were very happy to make sure that he had his needs met, but for the extras, he would need to get a part time job. He complained at first, lamenting that he would not have time with his studies to get a job. I pointed out that if he had time to go to concerts and spend time with friends, he could manage to get a part time job somewhere.
My son ended up delivering pizzas. He did well on tips, the hours worked with his schedule and he was able to do more with his friends when he did have time to get together because he had money.
By letting your children understand from a young age that they must work in order to have money, you are instilling in them strong financial tools that will last them for the rest of their lives and not just during the time that they are in college.
Set A Firm College Budget
When my son went to college, I sat down and went over the expenses for school. We bought all of his school supplies online where we found the best deals.
We made sure that the clothes he was taking were in good repair, same for shoes. A quick trip to the doctor for a physical, optometrist for an eye check and a trip to the dentist. Preventative maintenance, just like a car can save thousands down the road. My son needed 2 small fillings and his glasses prescription had changed.
Finally, I sat down with him and we did a budget. His college offered a meal plan of 3 different tiers. The first tier was one meal a day, the second was 2 and the third one was three. When we did the calculations, it was far cheaper to get the meal plan than it was to get groceries. The only caveat at his campus was that there was no meal service on the weekends or campus holidays when school was closed. We saved thousands of dollars from the meal plan.
Next, we did transportation expenses. Gas to and from school, and expenses of getting home were all included.
Toiletries and miscellaneous was a fun time, we had differing opinions of what was absolutely necessary.
We created a budget and without telling my son, we added 10 percent to the amount for inflation and unseen expenses. When we went over the budget with him, we explained that anything over the budget would have to be covered by him. He understood and worked really hard to keep his expenses in the green.
We Are All Human
We all want the very best for our child, but there are times that they will make mistakes that have them falling on their face. Unless it is money for rent, or something else of that importance, when your child messes up their budget, don't be so fast to bail them out.
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