Wednesday, November 17, 2010

money, money money

I polled my college freshman yesterday asking what they wished their parents had done differently when they were in middle and high school. Of course "stayed out of my business" ranked #1,  but this one was a bit of a surprise. Many said "I wished they had taught me how to manage money". They find themselves now, as college students constantly in a state of monetary crisis. Because of the financial strain of putting a kid through college, many parents rightly let their kids know that if they want spending money they actually will have to earn it themselves. Most parents being totally tapped out with tuition and room and board, expect that their kid's summer job earnings will become first semester petty cash accounts. For many students this is the first time they have had a finite amount of money. They take out the old debit card expecting that the magic money will appear, just like their magic phones, their magic ipod downloads, and their magic college tuition. It can be a rude awakening the first time a card is rejected with a resounding....NO MORE MONEY! This may be for some kids, the first time they can't talk their way into or out of something. No money is no money. It is the ultimate, no manipulation consequence.  Unless a phone call to mommy and daddy succeeds with getting a wad a cash deposited in their account with the pro-offered, " I promise I'll never ask you again. Yeah right, until the next time.

Most middle and high school kids are on a pay-as-you-go plan. As in "going to the mall, can I have some money?", or "going to the movies, can I have some money?" or "going to hang in town, can I have some money?" or "need lunch money, bus money, pot and alcohol money."(only sorta kidding on this one). With so much going on in every ones life, the passing out of money becomes somewhat of a mindless activity. You ask a perfunctory," what do you need it for? " They retort with " a bunch of us... or I need say OK and open your wallets.

Just telling your now young adult that they are now responsible for their money, is truly a bit unfair, unless you have provided the training on how to do this. As parents we often expect our kids to do the right thing, even though this may be something for which they have no experience. Adolescence is ripe with these dilemmas. Many of the big decisions kids have to make, especially around safety issues, they have never had to make before. And because teens are impulsive, emotional and live in the moment, they often make the wrong decision, especially around money.

So here are some ways that you might take the time to prepare your kids now to manage their money to avoid those panic college calls. Perhaps over the course of the next month you and your kid keep a tally of all the money you give them, this includes, lunch and transportation money, clothes and incidentals, food, entertainment, and general running around money. Many of you have fancy phones that I'm sure "have an app for that". Caution: Do Not Expect Your Teen To Keep Track Of This. This would be an unrealistic expectation. As I have said in previous posts, teens are distracted, forgetful, and are probably not all that motivated to change the way things are. They are very happy with the pay-as-go model. Remember it is college students lamenting after the fact that they "wished" that they had been better prepared.

Once you have this amount, which I am sure will shock you both. Come up with a plan, and here you must include your teen in the process. Decide how you will mete out this cash, weekly or monthly. Perhaps you will decide that the money for them to manage will just be food/entertainment/weekend spending money, not big ticket items like clothes. Whatever it is, deposit into a debit account this agreed upon amount. Teach your kid how to check balances. Remember kids use alot of magical thinking, and they may take out a $20 here and a $20 there and not remember even taking the money out or what they spent it on. THIS IS THE POINT. We get that they are mindless, and this is the time now, in a protected environment to teach mindfulness about money. Maybe every Wednesday night you and your teen go on the website together and check the balance,  helping them to figure out what they will need for the weekend.  This helps kids to keep track. If you do this regularly then you won't get the " but I don't have any money left, and everyone is going to the movies, or I need new sneakers, or a new outfit for the dance."

The most important part of this plan is the consistency and follow through. It will probably take only one time of wanting to go out with friends, and realizing they have already spent their allotted money and you doing a little shoulder shrug, and saying " Oh I am sorry, that must be hard that you've already spent all your money. you're welcome to have your friends here." If you cave, or if you give advances on a regular basis, the message your kids will get is I really don't have to be responsible about this money, because I'll just be able to get more. And again this is the point. In order for any change to take place and become integrated it must be consistent and predictable.  This is where the hard work comes in. But the pay off will be enormous, because the pride your teen eventually feels for being "in charge" and 'in control" is priceless.

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