Ordinary- I think we all agree about letting your kids make some mistakes financially, but with a caveat- spending money on a sweater you don’t need because the GAP is having an online “50% off all markdowns with free shipping, today only” is the kind of mistake kids need to make. That’s $18 that’s not available for having fun or going out with friends that month- either/or, once the money’s gone it’s gone, plan better next time kind of mistake.
Having a running balance on a credit card (which was my understanding of the OP’s D situation) which somehow never goes to zero is NOT the kind of mistake you want a kid to make. That $100 balance, where the kid diligently makes the minimum payment, soon balloons to a $300 balance (with a bigger minimum payment) which becomes $800 once a few friends decide it would be fun to go to Jamaica for Spring Break and look- cheap hotel! Discount airfares!
The D could be paying off Spring Break for the next five years, long after the tan is gone and the friends have evaporated.
I’d rather my kids make mistakes on the 20 dollar “now I regret it” items than on stuff that goes directly onto a card which makes it feel affordable and “hey, this is in my budget” because the card didn’t get rejected. Even if it’s NOT in the budget, and you really can’t afford it.
My daughter is awful about this too – and oddly the other kids are not and we brought them all up the same; all had/have jobs and accounts all through high school and college. This one does the same eating out thing and so she also has gained unwanted weight. ugh
I would try to figure out why your daughter is spending so much money on food and clothes. It’s possible that she feels like she’s missing out socially by trying to budget and spend less money.
"Having a running balance on a credit card (which was my understanding of the OP’s D situation) which somehow never goes to zero is NOT the kind of mistake you want a kid to make. "
Totally agree. Credit cards are a convenience to people who can pay them off every month. They are a trap for nearly everybody else.
Credit cards are only good if you pay them off every month. If you constantly charge stuff with no intention of paying it off and keep running up the balance and get into more and more debt, credit cards are bad.
The OP’s daughter doesn’t need a credit card…maybe she should just use cash or a debit card. Yes, debit cards don’t have as much protection, but at least you’re only spending money you have…
This would also be a good time to go over budgeting and managing money
That may not be unique to college students, since many people in the US are carrying credit card debt, and spend lots of money on social status purchases. The result is often seen when there is no money for something big like a kid’s college costs or one’s retirement.
When my kids were growing up, a portion of their allowance went into a bank account for college spending money. They had access to the account in terms of being able to see the money accumulating. They also could contribute babysitting money, cash gifts and money from jobs. They were/are expected to manage and use this account all through college. A year before college we converted it to a debit account so they could get used to how it worked. because they earned this money and we will not contribute anything to spending money they manage it quite well. We also got them a version of our credit card for emergencies…and they have a good idea of what constitutes an emergency. My daughter has spent less than $100 in her first semester of college. She does not want to work while at school so is motivated to be frugal. She finds the plethora of free activities at school to be sufficient.
Some kids grow up with the credit card mentality. That is all they know. That’s how their parents pay for things. They think debt is a way of life.
My D’s roommates both had that mindset. No sense of budgeting or a clue about how to handle money.
One of her roommates read “Total Money Makeover” (actually D started reading it aloud to her like a bedtime story for encouragement…it was the joke that wasn’t really a joke…) . She got on board (and finished reading on her own)–Dave said deliver pizzas for extra cash and she did–she started delivering pizzas. Loved the extra cash and the difference it made. Did it a few months. Made a budget. Saved an emergency fund. Looked for a new job to increase earnings (and has done very well with promotions). She just needed a plan.
The other roommate is slower to get it together but at least isn’t in “crisis mode” all the time. Which is huge. While not “ahead” at least she’s not “behind”. Such a total difference.
To some extent, kids do learn what they live—if everyone around them saves and budgets and leaves below their means and pays all debts early or on time, I believe they do as well.
If growing up, dining out and shopping are luxuries, they are still things they don’t do as a regular everyday thing. On the other hand if they’re always out shopping or buying and spending money the family doesn’t have before its earned, that is their norm.
It’s great that the room mate adopted the Ramsey plan for getting ahead if her bills—sounds like the roommate was receptive and they supported one another.
Some kids who grow up in this environment get their first day of reckoning when their parents tell them that there is no money for their college, even though the parents’ income is too high to get financial aid anywhere.