<p>POIH, does “unsecured CC” mean “unsecured credit card”? Are you afraid that if you give your daughter only $750/month for expenses, she will run up big credit card bills and use up her savings? </p>
<p>I suggest you put her in charge of paying her own credit card bills, and have a stern talk with her about the necessity of paying her bills in full every month. If you give her $750/month, which most posters think of as quite a generous allowance, and she begins to spend down her savings and accumulate credit card debt, then I’d say it would be a good time to take a pair of scissors to the credit card.</p>
<p>You are a wealthy man, and can give your daughter a big allowance. If you don’t think $750/month is enough, you can give her more. But I’d say it’s a dangerous sign if she is unable to get by with whatever large amount you are giving her.</p>
<p>Cardinal Fang: You got it wrong. What I was trying to convey that since DD has an unsecured Credit card on her name and a saving account with enough funds then in order to do the limit stress test she will have to spend much more than any amount I provide to her between 500 - 750 and may not happen for a long time.</p>
<p>So in that case does it matter at all that I give her a fix amount or just put in when the money when ever she goes down a fixed amount in her checking.</p>
<p>here’s a way that she can see the 'bottom" of the well - have her open up a separate debit card/ checking account at a Cambridge branch of the bank that you do business with, and you deposit the pre agreed upon monthly /semester allowance into THAT account. SHE then uses money from that account to deposit $$ into her MIT card to swipe for food purchases on campus, and to pay for other expenses that she has. She will easily be able to log on to her account to check the balance, and will quickly realize how fast the money gets used. And you refrain from doing direct deposits into the MIT food acct, and let her figure out how much to spend for food and other expenses and where to spend it.[ I strongly encourage you to suggest she get in the habit of shopping for groceries at Trader Joes. Our local TJ is filled with kids from Stanford- smart kids know where the good bargains are to be found.]
2] LET HER KNOW that you will NOT REFILL her savings account if she taps into it. And 3] tell her the joint credit card is ONLY for emergency use, and she must get your OK before she uses it[ and obviously a shopping trip at NM or a sushi dinner at a restaurant is NOT an emergency.]
She won’t starve , but she will learn to THINK before she spends HER money.
[this is what we did with S’s accts, and it worked!] he is now MUCH more careful with his purchases than before.</p>
<p>Why can’t you just tell her that the expectation is that she lives off the $750/month and that she is not to dip into savings? And if a true emergency occurs (laptop breaks, etc) then you’ll help her, but not before?</p>
<p>I sense that you think she will spend down her savings and be left with nothing. But you seem afraid to discuss this with her and you want her to read your mind and at the most, drop subtle hints. </p>
<p>What do you think will happen if you tell her $750 but no more? Will she cry? Het mad at you? What are you afraid of?</p>
No – if she’s responsible and managing her own money, she will have self-imposed limits – like the “limit” I feel about wanting to keep a balance of at least $1,000 in my checking account. Or she will set goals for herself that she needs to save up for – for example, maybe she wants to go somewhere on spring break with friends, and she figures that the trip will cost $1000. You give her a reasonable monthly allowance – enough to easily cover basics, but not enough to finance a $1000 trip. But then she figures that if she can manage to set aside $250 every month for 4 months, she’ll have the money. </p>
<p>The “limits” don’t have to be starvation level – but there is a different between basic expenses and luxuries. If she has $75 and wants to buy a pair of jeans – she can go to Ross and have $60 left over, or she can go to Nordstroms and walk out with a $75 pair of jeans and nothing left over – so the “limits” exist even if the funds are ample. But if you tell her to buy herself a pair of jeans and put it on your credit card, and she knows that you are always very generous – then there is no limit, because there is no particular reason for her to even think about what she has vs. what she wants and how much she has to spend.</p>
<p>I’d add that my daughter probably has a pretty high limit on her credit card – I know that she came back from Europe last summer with a fairly hefty chunk on the card, and I don’t think she was anywhere near bumping her limit. But that doesn’t mean that she doesn’t experience the real “limit”. Of course, she has to pay her own credit card – so while she had a great summer traveling, she came back and has had to work very hard so that she can pay down the card.</p>
<p>I also think that, for the experiment to work, you need to trust your D. You need to let her know that she has to live within the limits of the budget you and she come up with. My S would never buy clothes for himself, so I did it for him. Women, however, are more likely to want to buy clothes and spend more than he ever did on them. So the $100 that my S thought was ample might not be enough for a female student. In which case, discuss with your D what is a reasonable budget and ask her to live within it without dipping into her savings account. If she needs to use her credit card, ask her to pay for her purchase out of her budgeted checking account.
If the agreed upon initial budget is found to be too tight, she can tell you about it and you may cover the shortfall; then you and she can discuss how much you should increase her monthly allowance by. But if you set a very high budget, there are plenty of ways to spend the whole of it. When I lived in London, I met a South Korean student who totalled the Porsche his parents had paid for within one month. Then he went on a spree together with chums that emptied out the budget his parents had set aside for his living expenses over a whole year.</p>
<p>menloparkmom: #183
We already have a similar arrangement.
DD has a checking and saving accounts. She uses the money from her checking account to put cash on her MIT Tech cash account. Her saving account is the back up account for emergencies along with her personal unsecured Credit Card.
If she uses her CC then she pays it off from her checking.</p>
<p>So Checking is the primary account for her daily activity as she can use VISA debit card too.</p>
<p>I only add money to her checking account when ever it goes below a certain amount.
She is aware of the fact that unsecured credit card is solely on her name and it will only affect her credit history if she won’t manage it properly.</p>
<p>That precisely is the arrangement with just one caveat that there is no set amount. She has been very responsible till now and I don’t think she will be irresponsible going forward too.</p>
<p>The point was to just ask what might be a reasonable amount so that I can bring up the question when she exceed that amount.</p>
<p>The unsecured credit card is solely on her name and I think it will be an important finance lesson for her to manage it properly. I certainly bring the question of paying it on time with her periodically.
But I don’t look at her monthly CC statements as I think she deserves that much privacy.</p>
<p>Calmom:#186
Yes, that might be one reason to provide a fixed amount but if she already have more money saved in her saving account that she need for the trip then the point of fixed amount become futile.
Fortunately or unfortunately she built quite of bit of savings during her middle/high school years and we never asked her to spend it on anything thinking it will provide her a big cushion during the college years.
Now that along with unsecured CC provide her enough cushion to exceed any fixed amount I might provide for a long time.
So will providing a fix amount in that case make any sense as she any way have to budget her expenses?</p>
<p>POIH…you are giving your daughter a generous $750 a month. She also has a cushion of savings in her own accounts from her own work. </p>
<p>Here is my suggestion. Tell her that you will continue to give her the $750 a month. Explain what they is supposed to cover and compliment her on keeping within that financial frame (if she has done so).</p>
<p>BUT here is where we differ…I would NOT top off her account from now on. If she goes OVER the $750 a month, she can take the money from her current earnings OR her savings and top it off herself. That is HER money that she can use to pay HER extra expenses.</p>
<p>Of course if you want to give her money for her birthday, Valentines Day, Easter, Christmas. First Saturday in the month:) that is up to you. </p>
<p>This way…you are giving her enough to spend $20 a day on meals AND an extra $130 a month on top of that. She works…She has money for other expenses if she so chooses. OR she can “economize” on her food spending by either cooking herself or eating at less expensive places…to have more to spend on other things.</p>
<p>marite:#188
I do trust my DD and know that she will be responsible with her finance.
I just want to know what should be a good amount beyond which I need to talk to her about her budget process.</p>
<p>I don’t think she is going on a crazy spending spree.
I would be fine as long as she is average out over the semester within my mental limit of $750.</p>
<p>I was just trying to reassure myself if that is a proper amount or do I need to have a larger or smaller amount.</p>
<p>POIH…the amount YOU want to give YOUR daughter is really up to YOU and your family. If YOU think $750 works than fine. That is your decision. Many others here have given you opinions…but at the end of the day…it’s YOUR decision.</p>
<p>It’s your decision POIH. We paid for #1 on your list only. Our kids worked during the summers and while at school to pay for 2-6. AND we never topped off their accounts. And yes…my kid lived in Boston. The second kid is in the Bay Area (you know first hand how much it costs to live there). Both got the same amount from us…$850 a month to live off campus and that included rent, utilities, food, toiletries. NOTHING ELSE.</p>
<p>I guess the big question is…how much do you want your DAUGHTER to be responsible for EARNING? If the answer is NOTHING…then go for the $750. If you think she should be making a contribution to her own spending…then figure out what that might be and subtract it from what you give her. If you want to give it all to her…that is YOUR decision.</p>
<p>POIH,
I am having trouble understanding why this is causing so much consertation for you. Posters here, including students currently attending MIT and parents who have, or have previously had kids attending schools in Boston, have all assured you that $750/ mo is MORE than generous for your dau per month for meals with ample spending $$ left over. I suspect she can and does spend less than that most months. </p>
<p>You never responded to my conjecturing as to whether perhaps there was a large January bill becaue of holiday spending. You state that you don’t ck her credit card bill, so have to surmize your are watching her checking/savings deposits/withdrawls as your method of monitoring her spending. What are you afraid of? That if you ask your dau about her spending patterns or you set a limit that she will not love you, or will think you don’t love her? That is called conditional love, and you have never given any indication that this is an issue. What is the worst that can happen if/when you have a conversation about expenses (which, judging by your thread title, you plan to have, though now I am not entirely sure you will). Will she get upset?Defensive? Angry? All of those reactions suggest she is NOT handling her $$ well, and thatr you are 100% correct in your need for this conversation. If she is handling her finances well, she will be responsible, cooperative, open, etc. If she overreacts or gets defensive, then that should confirm for you the NEED for you to have this conversation. If she is cooperative, comfortable and open, then you are reassured that all is going well and that this recent spending increase was temporary and/or explainable. YOU win either way and YOU, as the parent, are, and should be, in charge.</p>