Monday, August 24, 2015

The Art Of Budgeting And Back To School

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.

·         Let them know what costs you are covering: tuition, books, rent, meal plan, health care costs, cell phone, etc. . . .

·         Outside of those fixed costs, you will (or will not) give an allowance on a weekly or monthly basis. It is easy to transfer money from your personal account to your child’s personal account online. You can, for example, set up automatic transfers with most banks, moving $100 from your account to his or her account on the 1st of each month.

·         Don’t dump and run! Do not dump a lump sum of money in your child’s account at the beginning of the semester. This will lead to frivolous spending during the first month(s) of college. A good idea might be to ask your child to keep a journal of his or her spending habits for the first month and then review it together in order to get a better understanding of finances going forward.

·         WORK is a four-letter word, but it’s not a bad word. Yes, your child is in school to learn, but having a job teaches many valuable lessons, including the value of financial freedom. It also teaches real-life skills that will be important after graduation, like showing up on time, working hard, and the value of earning a paycheck. This income can supplement expenses you are covering, providing money to for a few good meals out during the month, going to a concert, or buying a new pair of jeans.

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.

Monday, August 10, 2015

Learning To Let Go

When you are a young parent, meaning a parent with young children, there is no shortage of books with tips on parenting. How to Breastfeed, How to Get Your Child to Sleep, What to Feed Your Picky Eater, etc. Friends, colleagues, and parents are chock full of advice on what to do when your child won’t nap, what doctor is best, or which homeroom teacher is the nicestWhy is it, though, no one gives advice to parents as their children grow up and get older?

I can tell you this: when you drop off your child at college for the first time and, as it was for us, leave him alone in his dorm room, that is a really tough day. You have raised him under your roof, and now he’s on his own. You leave him like deer in the headlights, and you’re supposed to suck it up and walk away. 

Today my oldest left for Chicago, seeking his fame and fortune in the Windy City. As you know from a previous post, he graduated a few months ago and spent a good part of the summer living at home. It was like old timesweekends together, watching a movie or baseball game on television or just enjoying a beer by the barbeque. It felt awkward at times leading up to today, knowing that this chapter was about to end.

As I walked out of our apartment this morning, I put on a happy face, gave my son a big hug, and told him to text me when he landed. As I closed the front door and started to walk down the stairs, tears were rolling down my face. I was uncontrollably sobbing.

No one told me there would be days like this. Be warned, they happen, and it’s hard. What is getting me through it is the excitement I feel for him as he starts a new chapter of his life. Your twenties are an amazing timedifficult but also exciting. Youre figuring out who you are, what you stand for, what you want to do, and how and where you want to plant your flag.

Letting go is the most difficult thing for a parent—letting children go and figure stuff out on their own, experience both the pain and joy of life without you. I am a control freak; I like to help map out plans, create ideas and businesses, but in this instance I can’t. I have to let go and hope that whatever advice or influence I’ve given (good or bad) will resonate and help shape a strong and confident child, ready to take on the world on his own two (immeasurably capable) feet.