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IT’S BEEN A MONTH since I dropped off my twins at college, one east, one west. Each has a debit card for an account with the credit union here in our hometown. One has downloaded the credit union’s mobile app. Both are already developing their own ideas and strategies for managing college life on a shoestring budget.
I got them their debit cards some time ago. I also opened a teen account for their brother, who is still in high school and at home with me. This past month, two of the three overspent, triggering an automatic draft from the savings side of their accounts.
One was my teenager at home, who miscalculated the cost of getting a pizza delivered. One of his siblings ran out of cash shortly after buying her textbooks. In both cases, there was sufficient money in their savings account to cover the excess, with a $5 service charge applied for the insufficient funds transfer.
My son and I had a long discussion about what had happened. This improved his understanding of debit cards and how to avoid future bank charges. He’s now getting his weekly allowance from me via automatic bank transfer. The allowance is sufficiently modest that it’ll be several weeks before he can again order a pizza for himself and a friend.
Meanwhile, I haven’t yet discussed the overdraft with his sister. I had told her I’d be putting money into her credit union account, but I hadn’t made the first deposit when she inadvertently emptied the account. I still don’t know precisely how much she needs every week, but I went ahead and set up a weekly deposit anyway. I’ll know if it’s the correct amount by trial and error.
I have much to learn about how today’s young adults develop budgeting skills. I’ve been browsing sites and videos that are oriented to those just starting out. It led me to send one of the twins—the one without the luxury of a college cafeteria and a meal plan—a kakeibo journal. Sure, they could set up an initial budgeting chart in any notebook, but they’re novices and a little handholding seems warranted. If it’s fun and attractive and friendly, all the better.
I don’t get the reasoning of weekly allowances for college students. Most college students are capable of holding a job to earn money for their textbooks and incidentals, why an allowance? I suppose if they haven’t been taught about money management by this time, danger lies ahead.
Good question.
My college student with an allowance has no meal plan, unlike her sister. The allowance is designed to cover the cost of preparing her own meals, nothing fancy. She is applying for jobs, and doesn’t want to depend on me for incidentals. However, if she were to spend an extra 15-20 hours a week studying, instead of working at a job, that is worth the tradeoff of needing a slight bit of family support from home. Both my students have an opportunity right now to spend time in expensive-to-maintain labs, computer labs with better equipment and software than they’ll have at home for many years, and scientific labs. That’s where I’m encouraging them to spend any “spare” moments, along with libraries, museums, school lectures, office hours with faculty, and out in public spaces.
I am with Clark Howard that college students working up to 20 hours a week produces a better adult than not working. Anything over 20 hours does begin to cut into school work, but generally something in the 10-20 hour/week zone tends to cut out unnecessary social time, adds life lessons not learned in the classroom, actually creates a better grade outcome, and (last but not least) produces income.
Obviously every student is different and some might react better than others to certain situations, but this seems to be the case with the majority of students.
Don’t want to rain on anyone’s parade, but debit cards are terrible for young people. They do not teach good habits, don’t help establish/maintain credit scores, minimal protection against fraud or inappropriate usage, no benefit programs (cash/travel points) and can’t help you in an emergency. Far better to teach kids how to prudently leverage and manage credit. (Yes, KIDS, don’t wait until they’re young adults, mine were joint users before the age of ten!)