Teenager's Financial Management
Question:Our daughter is a college student who seems to think money grows on trees. We put her on a monthly budget based on her estimated expenses and gave her a credit card to use for emergencies. But she maxes out the credit card every month on what she calls emergencies (concert tickets, new hiking boots, etc.) and my husband bails her out by paying the bill. I'm furious with him and worried that we're setting our daughter up for trouble in the future. How can we turn this around?
Answer: Hurray for you for wanting to halt this dangerous pattern. You're right that this situation is not doing your daughter any favors. And I can imagine the tension it is causing in your marital relationship. There are several steps I'd suggest to bring your daughter's spending in line, and I encourage you to start before that next credit card bill arrives.
First, sit down with your husband and let him know how strongly you feel about the importance of helping your daughter learn to live within a budget. His indulgent behavior probably is motivated by love, but he needs to know that it is not in his daughter's best interest.
Between the two of you, work out a clear plan for setting and enforcing a budget with your daughter. Then arrange a time to sit down with her and lay the plan out clearly.
Although you need to be the ones to work out the details of the new plan, these are some of the points I suggest you include.
You pay directly your daughter's tuition, room and board, and textbooks. Figure out a reasonable monthly amount for clothing, recreation and miscellaneous expenses to be deposited into her checking account on the first of each month.
You may want to also set aside a small amount each month to put in a savings account so that your daughter learns to save for larger special items. Or, if she works part time, you could offer to match a portion of her monthly savings as encouragement for her long-range planning.
Assuming that it is wise for her to have a credit card for true emergencies, spell out for her exactly what you mean by emergency. And let her know you expect that she will not use the card most months. Then have the bill sent to you and, if you see that she has used the card inappropriately, subtract that amount from her next month's budgeted allowance.
If she still asks for money for special items, tell her to put them on her birthday or holiday gift list -- or remind her to keep saving until she has enough.
And, most important of all, stick to your plan. It will take time for her to see that you (and Dad) mean business, but over time she will learn.
As your daughter begins to show more responsibility, let her know that you're proud and pleased that she's working within the budget. Don't expect a thank-you in the short run, but know that, in the long run, she'll learn lifelong skills and will feel good about her new financial competence.
Editor's note: Dr. Martha Farrell Erickson, director of the University of Minnesota's Children, Youth and Family Consortium, invites your questions on child rearing for possible inclusion in this column. You may fax them to (612) 624-6369 or send them to Growing Concerns, University of Minnesota News Service, 6 Morrill Hall, 100 Church St. S.E., Minneapolis, MN 55455.
