Talking to Kids about Heading Off to University/College Part 1 (of 4)
Posted by Gail | Filed under Kids & Money
Are you shipping your kid off to college or university this fall? Well, you’re just about out of time to get your last licks in when it comes to making sure they know how money works. Here are some things you should think about covering before you jettison them from the nest.
1. How will they manage their money? Whether you’re helping them financially, they’re paying for school themselves, or they’re getting student loans, they’ll have to manage their money. If you haven’t had the budget discussion yet, get going. I know it can be hard for parents to share their own info with their kids. But this is about educating them, and nothing has more impact than a real world example. So whip out your budget and go over it with them so they can see just where the money goes and how you go about managing it.
I have two worksheets that can be downloaded that will help you and them to bothsee the big picture and manage the day-to-day details. Download ‘em and use them to have a chat about the money.
They can use the Managing Your Lump-Sum Money Worksheet to enter all the money they’ll have from summer work, scholarships, bursaries, RESPs, gifts from family, and loans, along with any other money they can manage to scrounge. This is an important first step since this is usually more money than these kids have seen in one place, and the temptation to think it will never run out is huge. Using this worksheet, they can anticipate where and when that money will be spent.
Student Cash Flow Worksheet is the other download that will help students figure out where their money will go. Unlike a regular budget, the cashflow is divided into 24 columns. The blue columns show what you plan to spend in any given month, while the white are for what you actually spent. The cashflow approach acknowledges that students’ spending will vary by month.
Alex is headed off to university this fall (geez I’ll miss her) and when she did her first cashflow, I looked at the September numbers to see how she’d broken them out. I commented that I didn’t think she was allowing enough for laundry.
“Hey,” she said, “it’s a cashflow, remember.”
“What?” I asked, puzzled that she was calling MY attention to this. I’d made up the thing.
“I only put $10 in for all the months I know I’ll be home and can do my laundry here. For all the other months, I put in twenty bucks.”
“Ahh,” said I smiling. Apparently I’d underestimated her once again.
If you don’t bother to have this discussion with your kids before you ship ‘em off to school, you shouldn’t be surprised when they blow through their money and start hitting you up for more. This is, after all, their first opportunity to take care of themselves,. There will be trips and stumbles along the way. But having a clear plan means if you do have to pony up with some mac and cheese, it’ll be a short-term thing until the next month’s money comes into play.
Next (on Wednesday) — Part 2: contracts, impulse control and credit cards.
May 31, 2010 at 7:37 am
Thanks for this post Gail, my DD going off to University in the fall too, and this will really help!
May 31, 2010 at 8:18 am
I’d love to hear more about how Alex manages her finances at college. When I was in College, I really had no money management skills I think you are setting her off on the right foot.
Regards,
Jason
May 31, 2010 at 9:20 am
I have three more years before I launch my first ship to university. Thank god for that as I am not ready to be at that stage of my life. I can see I have a lot of prep work to get him ready for that phase of his life and handling money. I knew nothing about money back then. It’s a miracle I made it through those times.
May 31, 2010 at 9:27 am
A little unrelated specifically to college or university, although I did go to college, and money flow was okay.
One of the most important things I think a parent can teach their kids is how to cook. I was not taught how to cook and majority of my money that has been wasted over the years (much so in my teens and early 20’s) was on buying meals instead of making them.
Teach ‘em to cook, then they won’t need restaurants or fast food joints.
May 31, 2010 at 9:39 am
I am with you Kat, cooking should be an essential life skill that parents teach their kids. I was lucky enough to have a mom who is a great cook and passed her skills on to me. I am teaching my 8 year old so she will be able to cook for herself when she is an adult.
As for college, my sister is supposed to be heading off this fall and she is not really ready. I had the money and planning talk with her just this last week and she really has not planned for any ofthe what ifs let alone how she is going to cover her tuition costs. I am rather worried that she will get in over her head. I love this series… I will pass it onto her.
May 31, 2010 at 9:56 am
This is a great topic. I only graduated from university a few years ago and although I managed to come out in decent shape financially, I had no plan whatsoever. My parents thought that I was “good with money” because I’m definitely a minimalist when it comes to “things” so they didn’t think it was necessary to have a conversation. I implore all the parents (and students) reading this not to make that mistake. While I didn’t buy much stuff, I spent an insane amount of money going out for food and drinks. University/college is the first time that a lot of students become of drinking age. It’s also a time when they are surrounded by friends and there are many bars within walking distance so they can spend, spend, spend without worrying about who’s driving (a big deal for suburb kids, and probably country kids as well!)
May 31, 2010 at 10:44 am
maybe Alex should do her own blog for all the college kids out there? would be good to hear how the planning and worksheets help on a day to day basis and how her story differs from fellow classmates who didn’t get the same kind of money education.
May 31, 2010 at 1:00 pm
thank you gail for yet another very informational blog. my dd graduated with her masters and is thankfully well employed in her field; however, like many others she is carrying her student loan debt. we had many money discussions prior to her heading off to university, where she secured 2 degrees. after deciding where she wanted to study definitively, and which area of forensic psychology to pursue, she took one year off, saved hard, lived at home, sold her car, applied for every scholarship and grant she could find. i am proud that when she graduated she had a very realistic payment plan, and though she lives in high priced new york city, she has yet to have to ask either her father or myself for financial assistance. i make it a habit to gift her $$$$ for birthdays & special events, and our Christmas tends to be a shopping spree (all cash, yes!) on mom’s specially-saved and jealously guarded savings account, set aside throughout the year for this specific purpose. my mother and father were thankfully very money wise, and taught me the same. it’s taken me years to put some of those lessons to work but i am proud to say my daughter truly learned most of her skills from her grandma. and yes, grandma also made sure we both know how to cook, and clean, and do our own laundry. my daughter’s payback plan will have her out of debt well before most of her 20 & 30 year old friends, who consider bar hopping a necessity. and yes, she does have a savings account. and a credit card paid off each month in full. she reads these blogs religiously, and continues to learn. just as her mom. thanks again gail, for reiterating what we can all put to use on a daily basis. practice make perfect. debt free to be, soon!
May 31, 2010 at 1:08 pm
Teach them how to clean as well as cook before you ship them out too.
May 31, 2010 at 4:11 pm
Great job you are doing Gail, and your lastest blog entry is very relevant for all of us with kids… so just to ensure the message is not lost, pls update the heading to ” talking to kids about heading off….. as opposed to what it is right now “taking to kids…. a lil typo that i’m sure you can correct in a jiffy.
May 31, 2010 at 4:13 pm
Hey Gail, I don’t understand why Alex’s laundry will cost less when she’s at home. Presumably her laundry needs will remain constant. Did she assume you’ll subsidize the cost?
May 31, 2010 at 4:49 pm
Good topic. I had an friend(this took place about 10 years ago) whose daughter worked at his place of employment, lived at home, fed her meals, the daughter earned a take home of of $9000, (no income tax taken off) pretty good for the 4 months of summer employment. Her father paid the tuition and residence fee for the university year(8 months) while he expected her to have saved enough to take care of her general personal expenses for the whole year. Well she arrived home at Xmas time flat busted broke. I had warned him earlier to take a more direct interest and stop assuming she had money sense. Any, he lectured her but she went and repeated the whole thing again the following year. Turns out she did a lot of partying during the summer and the first semester. He finally cracked down on her but it came too late as she flunked out in the 3rd year, her marks were just barely passable the first 2 years anyway. She had a whale of a time but is now working at Burger King.
May 31, 2010 at 6:49 pm
I wrote a column for our student newspaper, “How to run your own household”, in the form of a column detailing “my” (in fact, collected from stories, letters and anecdotes) misadventures in cooking my own food, doing my own washing, cleaning the loo, trying to keep potted plants alive, and the like. So true on learning how to cook, clean and do the washing *before* one leaves home! And food safety…
One girl was wearing pale pink for a term because she had put her new red shirt in the washing with the white. A guy nearly killed himself trying to use a gas stove. (He didn’t know you had to *light* it.) Another girl managed to have a can of soup blow up in her place because she did not realize that when a can of soup starts to bulge, it’s high time to get rid of it. It was amazing.
I didn’t touch money issues, because I was beyond privileged on that and felt that I could not do other people’s real troubles any justice.
June 1, 2010 at 12:28 am
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June 1, 2010 at 6:07 am
She knows when she’s home she can use my machine and supplies so she’ll save up her dirty clothes and do ‘em when she’s visiting.
June 1, 2010 at 6:59 am
I didn’t go to college and neither did my husband so we aren’t really sure how it all works. We have one son (7) and I am saving money for him for his future now. But how do you know how much will be enough?? I realise whatever there is will be less he has to borrow or come up with somehow else but I’d like to have enough to give him a really good headstart.
We aren’t well off by any means so chances are he’ll have to fend for himself in one way or another but just hope we’re getting him on his way.
How do you konw what will be enough?
June 1, 2010 at 9:39 am
@ Jill — you don’t. But your goal as a parent (I have a 3 year old) is not I think to pay for everything. But rather to do what you can to do what you can. You should be saving for your son’s education in an RESP (see gail’s articles on these). Stay away from group resps like Heritage, USC, etc. For me personally my goal is to put in the max of $2500 each year + the $500 from the government, and no more. And in year 18, it is what it is.
June 2, 2010 at 5:30 am
[...] Part 1: cash flow management [...]
June 3, 2010 at 5:39 am
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June 4, 2010 at 6:16 am
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