Around the Cohen household one of our favorite movies is Billy Madison—not exactly heady stuff but good for a few really good deep belly laughs. I bring this up only because one of the many great songs in the movie is “Back to School,” which I sing over in my head as Labor Day approaches, the days get shorter, and the new school year is right around the corner.
As we get closer to school starting, parents who are sending their children off to college for the first time ask, “Do you put your kid on a budget at school?” The quick answer is yes. If you happen to be asking this question for the first time as your child heads off to school, it could be a tough transition for both of you. Setting up guidelines about spending or establishing a weekly or monthly allowance early in a child’s life is an excellent practice.
As I often tell new parents when saving for college, save as much as you can and then save some more. Start early teaching your child about money, specifically how much things cost specific to how much income you or you and your spouse make. If you don’t establish a context for the value of money, it will be hard for a child to understand.
When establishing a college budget with your child, I would suggest the following.
Like most guidelines, these are really suggestions, and in the real world life doesn’t happen as well as in a written blog post. I try to adhere to these guidelines, but I’m human, and we humans stray. So, for the true reveal, here is how things go in my life.
I do establish with my children up front what costs I am covering and what I am not covering. I do cover all of the basics mentioned, plus airfare when they fly home, social dues for a sorority, and groceries for their apartments. They pay out of their own pockets when they go out to a restaurant, bar, or convenience store. My children do not have cars and are responsible for their Uber fares (modern world problem). My children do have credit cards for which I cover the bill, but when they purchase items that are out of the terms of our agreement, I debit their checking accounts.
I have begun to share with my children how much their parents earn mostly because we have had to cosign on their leases. Anytime I can share with my children how much something costs relative to what we earn, it is a good lesson in curbing frivolous spending.
Another lesson I try to implement with my children, as well as with myself, is the concept of wants versus needs. When you are in a store, pause before you buy something; ask yourself, “Is this a want or a need? Do I really need another pair of running shoes? Do I need to buy 8 pieces of chicken when we probably only need 4?”
We never did the dump-and-run thing, and I never asked my children to write down and record their spending habits. Truthfully, my children are pretty good about watching their spending, so it has not been an issue.
My son worked his junior and senior year in college at one of the museums on campus, giving tours and working in the gift shop. My daughters do a fair amount of babysitting and have worked during the summers to earn money for the school year. A quick shout out to my daughter Laura, who had a fantastic paid internship this summer and brought her lunch to work every day, saving herself at least $50 a week. Best part is she banked a few thousand dollars this summer, learned some great saving habits, and will be paying for all of her spin classes herself.
As I write this, I have to admit we sound very privileged. My kids have it really easy compared to most. Their sacrifices and what they are paying for are minimal. Budgeting is hard work for grown-ups. It is harder for young adults. If they are going to be successful in life, learning to live within their means, understanding what things cost, having a realistic sense of expenses versus income, and appreciating the value of working are life lessons they probably won’t get in school but will serve them forever.