By Jan Gordon

OSU Extension

Kids seem to feel entitled to whatever they want, whenever they want it. Price is no object, especially when Mom or Dad are paying for it — including college.

In all the areas of raising children for a responsible future, the subject of finances is where parents can make a large impact. Surveys consistently show that kids learn most of what they know about money from their parents. It’s never too early to talk about financial responsibility.

The lessons should start early in life, providing children with spending choices and allowing them to face the consequences of those choices. We have an obligation, as parents, to provide for our children’s needs. We also can provide for their wants as gifts, or can save their money for them.

Financing a college education

Allowing children to help finance a college education is one of the best ways to teach fiscal and intellectual responsibility.
Like all gifts and privileges, a college education can be abused. Students will work harder and graduate earlier if they are sharing the bills. Rarely will a student flunk out of college if he is paying for it.

Writers Foster Cline and Jim Fay of “Parenting Teens with Love & Logic” outline these options parents and their teens can use to pay for college:

o Parents should begin by setting boundaries during the college application process regarding what they are able and willing to fund so a child can make an informed choice. For example, a parent might say, “I will pay for four years of undergraduate tuition at a state university. If you want to go to a private or out-of-state college, I’ll pay the same amount as in-state tuition. You will need to cover the difference through financial aid or your savings.”

o The safest plan is for parents to tell their teens, “You pay for the first semester of college. After you get through the first semester, send me your report with average or above-average grades, and I’ll reimburse you to help with the second semester.”

o A parent also can pay a certain percentage of college expenses, from none to all. If this includes books and incidentals, it should be covered in an allowance overseen by the student rather than you. Just giving the student a credit card for payment when a bill is sent home is risky and sends a negative message on money management. Instead, judge whether to dole out a monthly amount or a yearly figure depending on how responsible your child has been in the past. Most freshmen will be more successful with a monthly deposit. They tend to overspend if they have a large balance available.

o Some teens are really industrious and want to help pay for their own tuition, books, room and board by working. Their parents may want to support them by matching their wages on a percentage basis they agree upon.

Even if you can afford to pay for it all, your student at least should be responsible for his spending money. The more responsible the child is, the safer it is for you to pay more.

Creating a plan

The most important information parents can share with their student is how to prepare a realistic spending plan. If a child is living in a dormitory, expenses can be somewhat controlled.
First, determine a student’s monthly income, and where the money comes from, including scholarships, allowance, work and savings. Sit down together and help them think about all of the expenses they will have. Colleges estimate the cost for incidentals at $1,000 a semester, including books and other class needs, snacks, eating out, gas, car payments, clothing, personal items, laundry, cell phone bills and entertainment.
Don’t forget a discussion on savings. Building a savings not only develops a lifetime habit but also helps prepare for an emergency like a car repair or extra class expense. Help students set priorities and distinguish between those items that they will “need” versus those they will “want.” If expenses are exceeding the income, students should look for ways to cut back. Even a soda or coffee a day adds up.

Talk about what your students can do if they do exceed their budgets. Working or acquiring a student loan is a much better investment than relying on credit cards. Most universities also have prepaid cards where money can be deposited to cover laundry, snacks or supplies at the bookstore.

If your student still is in high school, you’re fortunate. Start a budget now. Require their allowances to cover all their expenses, including clothing, so they can practice making responsible choices. It’s better to make mistakes while still at home.
If your children work, don’t let them spend all of their money. Kids should be covering their expenses and saving for future needs, like college.

Gordon may be reached at 330-725-4911.