How Not to Move Back in With Your Parents
Financial Literacy 101 Podcast Episodes
What Your Parents Didn't Tell You About Money
Listen to the Podcast
Pete and Alex talk about some of the financial advice your parents might have given you that could actually end up hurting you in the long run. *Disclaimer: We still love you mom and dad!
Read the Show Notes
It’s been well over a decade since the term helicopter parents became part of the college-going vocabulary. If you missed this in Webster’s (dictionary), pause for 10 seconds and it will come to you—“hovering”. The new reality, regretfully, is that many college students assume parenting includes arms-length managing, e.g., the duties of organizing, scheduling, and in some cases “subbing”. Everyone, parents and children are just too busy!
Doing for--instead of-- doing to, specifically teaching essential adult skills has somehow escaped many parents. And it is quite evident in the arena of personal finances for college students.
Parent Mistake #1: Not teaching their children practical “How-to” money management skills: Surveys of entering college freshmen show that two-thirds receive a letter grade of D or F on knowledge of basic financial matters. Follow up questions indicate that almost half of the students claim their parents never shared information on financial matters.
Parent Mistake #2: Not teaching their children basic budgeting skills: If your parents bought you a car and let you get a job to make the payments, that doesn’t qualify as a valuable life lesson----did you learn anything? Today, all colleges and universities that provide financial literacy programming generally start with basic budgeting. Students know how much they are spending, but generally don’t know how to cut spending (if necessary) because they are not working from a budget.
Parent Mistake #3: Not teaching their children the consequences of too much debt: Buying things on credit is so easy it’s scary. Loans for homes, cars, furniture, even orthodontics is the norm. Going to college and paying for it using loans is also the “American way”. Listen to Pete and Alex talk about the mistakes parents make and reflect on his comments about the reason why parents don’t talk about student loans. Here at MoneySmarts, we’ve observed that students over-borrow simply because the money is available, which is an incredibly scary notion.
Parent Mistake #4: Not teaching their children about the effects of living the “high life” in college: Higher education is under attack for escalating costs. The explanations don’t make it any easier for you to pay tuition and fees. If your mother and father attended college, surely they have shared with you what it was like to live in a haunted dormitory, share a shower with 25 hall mates, and have a meal plan where mystery specials were regular and dessert was Jell-O. And oh, the state-of-the-art recreation/fitness center---it didn’t exist. Guess what…one reason colleges costs are rising is because students want the same amenities they have at home. Ask your mom and dad if their college experience was so awful without the perks you enjoy.
Parent Mistake #5: Not turning off the funding tap after 4 years in college: How much career guidance did you get at home? Twenty-two year-olds are not supposed to know what they are going to do for the next 40 plus years. If your dream is to be a teacher, scientist, or entrepreneur go for it. But, a degree is not merely a credential associated with income; it represents personal transformation and a foundation of learning that will take you in directions not yet in your crystal ball. The quickest way to make a degree more costly than necessary is to extend time-to-completion. An extra semester or year is not a prudent expenditure.
Okay, we have beaten-up on parents enough and know not all fit the descriptions above. If your parents have taught you values, given you a moral compass, and prepared you for a society where leaders have character and citizens solve rather than make problems, than a few deficits on financial matters pale in comparison to having an anchor that mom and dad shaped. The MoneySmarts Team can be a resource if you need help with some of the fundamentals. Feel free to contact us at email@example.com with any questions.