When Helping Your Kids May Not Help

LSS Center for Financial Resources
Breck Miller, Community Relations Coordinator

Let me tell you about a college student I had in a class once.  At the end of class, nearly everyone had left except for one student.  The way they held back, I knew there was a conversation coming.  Once the other students left, they finally approached me and said, “I have a problem I want to talk to you about.”

This isn’t a terribly uncommon intro in my line of work.  Usually, it is in reference to credit card debt, student loan debt, collections, lack of income, or any combination of similar topics.  No, not this time.

cash in hand white

Our conversation went like this:

“I have a problem I’m hoping you can help with.”
“Sure, I’ll give it a shot.”
“Well, my parents are paying for all of my college costs.”
“Nice. That is certainly a help for you in the long run.”
“And they are paying for my apartment.”
“Understandable.  It’s kind of part of the college expenses.”
“And they are paying for my car.”
“OK.”
“And my car insurance.”
“Wow.”
“And I have a credit card for all of my incidentals that they pay off every month.”
“OK………so………what’s the problem?”

I’m sure you are thinking about the same thing I was at that point.  This sounds like the dream for any college student.  Life is paid for with no future responsibility for those costs.  That’s a dream come true.

As it turns out, this student was perhaps wiser than most when it came to awareness of their situation.  They explained:

“Oh, I know how fortunate I am and I really do appreciate all of the help that my parents give me.  I just know that I’m going to want to be independent at some point in my life.  Because everything is taken care of for me now, I don’t have any idea how to actually take care of myself when that time comes.”

WOW!

If all of our kids had this same self-aware kind of wisdom, I think we would have a LOT fewer financial issues in our country.  Unfortunately, this student seems to be the exception rather than the rule.

I started my response expressing how impressed I was with their attitude.  We then talked through a few ways they could work with their parents so that the parents could still help and the student could still learn to be independent.

Knowing how to handle money isn’t a natural instinct like walking, talking, and breathing.  Our kids don’t have to know everything about money at the age of 6.  But if we don’t gradually teach them how to handle their finances, they will either be forever dependent on someone else or continually fail in their personal management.

If you are able to help your kids out and want to take the financial burden off of them, here are four ideas to help you help your kids learn.

Reimbursement – Give them an amount of money for the first month and then reimburse what they spend for the next month.  Don’t just hand it out.  Have them turn in an expense report before they are reimbursed.  They will find out exactly where the money goes and what it costs just to live, not to mention the other stuff student spend money on.

calculate budget

Balance – Put the money in their checking account and make sure they are balancing their account.  Any overdraft fees and interest are their own to make up.  Again, you are helping your children, but they are learning to track money and what it costs to live.

Escrow – If you have a set amount that you want to help your kids with, work out a deal.  If they work and make money on their own, your aid is reduced by that amount.  BUT, that reduced amount now goes into a savings account that is theirs when they graduate college or at some other benchmark that you set.  Now you are continuing to help, but reinforcing the value of their own work and investment.

Model It – However you are going to help your kids, model it for them.  Many people learn best by seeing it done.  Give them the opportunity to watch you manage your finances.  It won’t either of you anything, but what they learn from your situation can be priceless.

If you aren’t quite there yet but would like to set yourself up to be able to help your kids, the counselors at the Center for Financial Resources can help.  You don’t have to be in financial crisis to see us.  We can simply help with establishing a budget and habits that will help you teach your kids by example.

You can schedule an appointment with one of our counselors by calling us at 605-330-2700 or by visiting our website.  Appointments are available in-person, by phone, or through a secure portal over the internet.

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