Money tips for parents of first-year students

It’s likely that you, as a parent, are covering, at least in part, your child’s living expenses while he or she is studying. However, there are things you can do to get your child to spend responsibly and start saving.

IF YOUR child is one of the thousands of first-year students enrolled at institutions of higher learning for 2018, you may have found yourself on a parents’ WhatsApp group discussing the tricky question “How much money do we give them?”.

Niel Fourie, the public policy actuary at the Actuarial Society of South Africa, says funding young adults who are not yet earning an income is tricky.

“Students tend to demand the freedom and privileges that come with being adult, but, at the same time, they are not yet in a position to earn their own keep. This means that you are probably still funding them without having direct control over how they spend.”

Fourie says the good news is that, as long as you control the purse strings, you can still teach your children how to spend their money responsibly and how to get into the habit of budgeting and saving.

If your young adult is not yet in the habit of saving a percentage of the money that comes in, whether it is birthday money, pocket money or earnings from weekend jobs, you are unlikely to turn him or her into a committed saver overnight.

But, says Fourie, the following steps will help you to get him or her there. And if you have been struggling with controlling your own personal finances, you could use this opportunity to learn with your young adult, he adds.

Circumstances differ and so do individual requirements, which means there is no ballpark amount that will work for all students.

Fourie says instead of agonising over getting the allowance right from the first month, provide enough money to cover estimated expenses.

“Don’t start too high, and make sure that it is understood that the amount is a starting point. And then tie a nonnegotiable condition to the regular payment of the monthly allowance: the submission of a spreadsheet that details all expenses.”

He suggests a column for essential expenses, such as food and transport, and a column for non-essential expenses, such as eating out, movies, clubbing and alcohol. Not only will this help you to determine an appropriate monthly allowance, but it will also be an eye opener for your child on how quickly money is wasted.

In order to ensure that this “chore” turns into a good habit, the next month’s allowance should happen only once the spreadsheet has been submitted.

Fourie says that teaching young adults to live within their means will require some tough love. “They will run out of money and, since most students have to pay for their food and transport, you will have to come to their rescue when they get it wrong.”

He says that, because generous top-ups simply reward undisciplined spending, allowance top-ups should be made only on request and on presentation of an expenses