A Hard Lesson on Spending

Stressed StudentA recent USA Today article discussed the story of a 22-year-old junior college student who was in the fortunate position of having her grandparents save $90,000 for her college needs.  Imagine the hard work required to save this sum for her benefit.

Well, it appears that the student decided to spend the college fund on a trip to Europe and clothes shopping and is now not able to afford her senior year.  In addition, the student went on a radio show complaining that her parents were to blame as they did not provide her with an education on how to budget your money.

Initially the parents refused to co-sign her student loan as they were not confident that she would repay the loan.  Not surprising!

Is this a product of not understanding how to budget your money?

Or, is it a problem of not having an understanding of being responsible for your own actions?

Maybe it is a little bit of both.

Learning how to manage money should be taught at an early age and as it is sometimes stated “early and often”. I have written a few posts regarding the benefits and tips for teaching your child about money.  Click on the link to read :  Teaching your Child About Money

Instilling a value about money is also an important aspect of growing up and having a job at a young age can teach valuable lessons on earning a fee for work well done.  The value of a pay check goes far beyond the actual money earned.  It provides an understanding of being able to be self-sufficient and a greater feeling of accomplishment.  Provide this lesson to your child and instill a hard worker for life.  If you want something, you have to earn it.   Good old-fashioned advice!

A book by Ron Lieber, New York Times personal finance columnist, titled “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money” tackles the many issues that parents face in raising children today.  He explores parenting techniques that can avoid spoiling a child and raise one that is the opposite.  Lieber follows that having a child who is not spoiled is basically about instilling “good” values and raising fiscally responsible children is all about using money as a vehicle to teach those values.

Teach these lessons to your child sooner rather than later.  As Lieber states

it is rather absurd we don’t have these conversations with children, given the incredibly high-stakes decisions we vest in them by the end of high school where a 17-year-old is expected to make  what can be a multi-hundred thousand dollar choice about what college to attend.

This hard lesson of spending your college fund on trips and clothes should be openly discussed with your children so that they can learn what can go wrong when you do not act responsibly. And these life lessons on spending will last a lifetime.

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About Maureen Crimmins

Maureen Crimmins is co-founder of Crimmins Wealth Management and a fee-only independent financial advisor. Have a financial question? ASK MAUREEN

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