Should My College Kid Get an Allowance?
This topic came up when one parent wanted to fund $1000 per month into their college kid's account. π³
What is an allowance? An allowance is an amount of money given on a regular basis. It may have rules or stipulations on under what circumstances it is received (for young children it may be for doing certain chores) or "just because we can" with no rules in place for how it must be spent.
Let's start with, Your college kid should not have time to fiddle around (even if it's in NYC) to spend that kind of cash every month. Unless they are getting an Underwater Basketweaving degree, they should be studying. Being a theater arts major shouldn't require attending expensive shows every month either.
If and how much to give your teen will depend on your circumstances. If all of your teen's bills are paid for, then an allowance might cover a tank of gas each month, car expenses such as oil changes and registration, and one decent meal at a restaurant.
Eventually, they will need a nice business outfit for interviews and college fairs. This is usually a one-time expense, maybe with tailoring, that you can fund at that time.
The teen, whose parent wanted to fund $1k per month, earned scholarships to cover their tuition and books and included the out-of-state fees. Parents are covering the dorm and meal plan. This parent reasoned that since Johnny's scholarships saved them from paying out-of-state fees, they could give it back to him in an allowance. Not a bad plan but Maybe there's a better way.
Maybe have an allowance (a smaller one) that has a relationship to their grades, or hold onto it for the final GPA at graduation.
When I work with families that have saved for college or have investments earmarked for college, I suggest that they hold onto those funds and give it as a college graduation gift as a downpayment on a house or a car, or to start their retirement investments.
Another reason for not indulging your soon-to-be independent adult with too much extra cash: If your teen gets into the habit of having an extra $1000 each month for 4 to 6 years, and spending it, how it is going to turn out when at graduation they are suddenly broker than they've ever been? That is the reality of college graduation. The vast majority will not graduate with a 6-figure income. An entry-level income of $65,000 doesn't go as far as they will think it will, and most graduates won't be making even close to that much.
All I'm asking is that you think about the possible ramifications and discuss possible rules that go with receiving an allowance of any kind.
To Your Success,
Denise
P.S. When it comes to college there's a lot that parents and teens don't know that is costing them money. Let's get on a call and see if Cracking the Code to Free College is right for your family.
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