<p>JYM - the word “entitled” has such a negative connotation, and I did not mean to imply that your son was ungrateful. Two entirely different animals. </p>
<p>My daughter is also fortunate to have graduated without any debt and to have some money in her name as well as an amount that we always thought we would pay towards school. When she needed a car this year, we gave her a lump sum towards the car and with her graduation gifts + a small car loan ($3000), she was able to buy a 2010 car. We encouraged her to take the loan rather than to deplete her bonds and her mutual funds. I wanted to encourage her to keep a little cushion. </p>
<p>I am not even discussing the money we have that we had thought would go for undergrad expenses. I just think eventually she will go to grad school (although she is getting her masters with her teaching program) or law school. At that point I would like to give her that money and say, “Hope this helps a little.”</p>
<p>Slightly off topic, but I know the greatest gift we can give to our kids is our own solvency. I am determined that I will have enough to cover my expenses as I age.</p>
<p>Just had a brief chat with DS as whe was walking to the library to study for finals, to clarify what he wants. As I thought, what he wants is less oversight. He wasn’t even all that interested in having the lump sum allowance for the next 5 mos now. What he wants is not to have us monitor his money management. He and I both realize that in actuality not a lot is really needing to change, and what would probably make him more comfortable is not to have the on-line shared savings account. My response was that I would actually like to see him demonstrate some savings, and would be happy to let him empty that account if he might consider using it to make a token $100/mo savings deposit in it , just so he feels he is actually making the direct effort to “save”. He thought this was, I guess, silly (essentially the opposite of what he is looking for). He intends to maximize his company savings/matching plan when he starts his fulltime job, and hopes to live on 1/3 of his gross income, investing the rest.
I am very hopeful that these are doable, reasonable plans, but just dont know if he can really save as much as he thinks. Then again, I dont want to dissuade him!</p>
<p>He understands my concerns about proper financial management. He is open to talking about this when he gets home next week. Any other compromise suggestions?</p>
<p>I cannot imagine any other response. “I want you, an adult child, to prove yourself to me on this issue so I am comfortable with you controlling yourself financially.”</p>
<p>From every post you have made about this young man, he may stumble, but crash and burn??? Not likely. Especially since he now is really aware that you have a concern on this issue. </p>
<p>I have not read or followed the thread so I may be repeating something already metioned. I have heard of a few cases of similar situations and none of them ended well. Most kids at this age albeit seemingly mature and responsible are just not mature enough to handle a small windfall. All of my sons are very mature and very responsible yet when we drew up a new Will we included that in the event of both my death and my husbands our sons would receive money at specific times over 15 years beginning at age 28. Our other child would not receive money at specific times but rather under certain circumstances. This was all clearly spelled out.</p>
<p>We informed our sons why we had chosen to do it this way and they did’nt seem to care. I guess they are optomistic about us still being here in the next few years. The matter has never been discussed with our fourth child.</p>
<p>Thanks, 07dad. Yes, I think he might have the potential to stumble, but i dont think he will crash and burn. As I mentioned above, he does have a tough act to follow, as we turned over all of older s’s funds to him when he graduated college and he has shined, managed his funds beautifully and has clearly “launched” successfully. </p>
<p>I thend to be the “avoid a problem if you can” type, and the males in the family (ie everyone 3else) are the “deal with it if/when it happens” type. So I try to prevent a problem, they worry aboutit if/when it happens. Different styles. </p>
<p>AM off to take a walk with DH and we will discuss this further. That said, I kinda know where he stands, though he doesnt know yet about the $800 DS took from his savings and put into his checking account to cover bills.</p>
<p>Its an example that DS hasnt quite mastered the art of budgeting and money management. He didnt need to buy older s’s flat screen. He hadnt budgeted for it. In fact older s wanted to buy him one for his birthday/graduation this spring. But nope, younger s saw it as a “good deal” (yes it was, and older s had 3 other friends lined up to buy it). If younger s hadnt purchased the tv, which wasnt really necessary, he possibly wouldnt have had to tap into savings and could probably have honored the promise that he would not touch it til after the end of the year. To me this says he isnt quite ase ready as I would hope.</p>
<p>In what line of work would this be possible? </p>
<p>My 22-year-old (recent college graduate) and 25-year-old (recent recipient of a master’s degree) both have good jobs and are self-supporting, but neither of them could live on 1/3 of their gross.</p>
<p>jym, we realized when the kids were about five that UGMAs could blow up in our faces and quit funding them. What we saved since is in DH’s and my names. There are also savings bonds, which were gifts from friends and family when they were born. Total for each is enough to fund an apartment deposit/basic IKEA furniture/down payment on a car – pick two – and we will take our names off of those things when they graduate. Both have expressed a preference for working extra now so they have those funds as a kitty for start-up expenses in real life, assuming DH and I do not tap into them for educational expenses as originally intended.</p>
<p>Both kids have checking/savings accounts at school and we are not on those accounts. Have no idea how they spend their $$, but they don’t come asking me for funds, so I MMOB. They deposit paychecks there and use the $$ for books and spending money. We don’t do a personal allowance. Each has a savings account here at home which they set up with their allowance back when they were in 1st-2nd grade. Bar Mitzvah money and money they don’t want to touch goes in there. (S1 transfers big chunks to that account, which is not available online, so that he doesn’t fritter it away on online purchases.)</p>
<p>S1 and fiancee have been discussing how to set up bank accounts (joint and separate), and they have about equal amounts of money coming into a combined household. S would like to pay off his Staffords in relatively short order. They also plan on largely self-funding their wedding, but hope to do that from current income. (Neither buys into the bridal industrial complex. Biggest expense will be bringing immediate family members to this side of the pond. Civil ceremony followed by a backyard party later is not out of the question.)</p>
<p>S2 is a little more spendy than his older brother, but S1 is a real ascetic. They know what it costs us (and me in particular, on multiple levels) for them to attend the schools of their choice and are very appreciative.</p>
<p>S2 started asking us questions about financial planning, 401(k)s, health insurance, etc. when he was in HS and we were sitting around a campfire in the woods. S1 has come to the game a little later, but has motivation to learn this stuff now. S2 would like to try his hand at investing. Since he is less likely to have a well-paying job after graduation, I think that may need to wait til he has a 401(k).</p>
<p>Suffice it to say neither DH nor I had this kind of assistance with college expenses. We were zero EFC kids and have scraped together every penny ourselves for nearly 30 years.</p>
<p>When in college, the worm would use our mutual credit card for purchases like meals and books. When I put a few 1000 in his checking account, he used his debit card for meals, movies, gas, etc. He’d check in before purchasing items over $100 (I recall 2 calls from the Apple store verifying permission to charge). He gained privacy, I lost the info on his daily life. Of course I understood.</p>
<p>Now, all he wants for gifts is money to his Amazon account. The difference is that Jym’s son is only 21, still in college. I would not have loosened the strings easily at that age. I just don’t think the adolescent brain is ready for fiscal responsibility. He plans to live on 1/3 of his income? Ask him to research rents in his area, costs of transportation, utilities, cable, ROTHs, then have a realistic budget. His figure shows some immaturity. I sound harsh, but in a nurturing way, during vacation, I’d take a look at future wages and expenses.</p>
<p>On the other hand, there are lots of us who, beginning with freshman year, funded everything we funded either all at once or one-half up front each semester. I mailed my S a check for everything that was not paid directly to the school at the beginning of each semester and I never got asked for a penny more. </p>
<p>This is a bit of a tangent to the thread topic, but how do you have your kid’s inheritance distributed in your estates/wills? We were advised to put the $ under control of a designated conservator and have it doled out in 3 increments at 21, 30 and 35. Now that D is approaching 18 I’m thinking of changing it so she will get a lump sum. I lecture her often on the importance of fee only financial planners and diversification of investments, and she has always been conservative with her savings. Of course we hope to never need this clause of the trust, but it’s something I need to fix in order to sleep at night.</p>
<p>My son wanted to go to Europe for 3 weeks when he graduated from college as he figured it would be the only time he would be free to go. He used almost the last of the money he had in his savings account, but already had a job lined up and a car, and had already put a deposit down on an apartment. Does your son want the money to do something similar? </p>
<p>We spent more money on his sister’s tuition than on his, but did not refund him the difference - if he had gone to a more expensive school, we would have spent more on him. I would give your son the same amount of money that I gave his brother in cash, and, if you need to give him the rest of the money for your conscience, put the rest into his IRA’s and 401k’s as soon as you can (maxing out the contributions for as many years as it takes to use up the money). Since he wants to save so much of his salary, you can make it easy for him. That might be a win-win situation for all.</p>
<p>Ds plans to get an apt with a roommate, and he will be staying in the city he is in so there are no moving expenses per se, just more furniture. So is his goal is to live on about 2150/mo. We haven’t reminded h that he will be responsible for his auto insurance at graduation. We will have a budget discussion when he comes home.</p>
<p>As to the privacy issues raised with dealing with your son’s money, I did not have those issues with my kids. All the money we had saved for the kids from birthday gifts and such we gave to them in a lump sum when they started college (we had already handed down our older cars to them when they hit 16 and made sure they had credit cards of their own). We paid for tuition, books, and whatever room and board fees were, whether or not the kids were on or off campus. If they had had to fly home, we would have paid airfare. But insurance and spending money and cell phone fees were up to them - even if it were cheaper to have the kids on our accounts, we wanted these things to be their own responsibility and also give them privacy.</p>
<p>I agree with parentoftwo that not paying for everything is a way to provide privacy and to keep the parent(s) from having to wonder if they are funding stuff they might not agree to.</p>
<p>It effectively makes the student have work experience and usually compels some degree of budgeting.</p>
<p>I seem to be in the minority here in focusing on the legal form of the “earmarked” educational savings. FWIW here is what I would do, depending on the forms:
If it is an UGMA account I would give total control to the kid, with no looking over their shoulder unless they asked for it. In some states this is supposed to happen at 18, in others at 21. As an earlier poster mentioned, this is one reason not to do educational savings in an UGMA account.
If it is in a 529 account, I would not necessarily give any of it to the kid. The 529 accounts are the parents’ assets (according to FAFSA) and can be used for any educational expenses (even if the parents want to take classes at the local CC). Plus there is a tax penalty if they are used for anything other than educational expenses.
If it were a joint account of some sort, I’m not sure what I would do. We have done all of our college savings in 529 accounts or accounts in our own name.</p>
<p>While I am joint in a couple of credit union accounts we opened with S1 and S2 when they were younger than 18, I have no on-line access to the accounts and just hand them the statements from the mail when they come in. Each of our kids have gotten a modest allowance when they were in college (~$15 - $20/week) paid to them in a lump sum at the beginning of the term. What they do with it is their business. If they run out of money, that is their business, too. I can not imagine trying to monitor our kids’ week to week or month to month expenditures. I am happy to give advice when asked, and sometimes before being asked. But it is their business. So far it has worked well for all 3 kids.</p>
<p>I am reminded about different priorities at different ages. In the summer after my freshman year in college I had a job working construction and made good money. I wanted to buy a nice stereo to have in my dorm room. My dad was interested in buying a stereo (his first at age 53) and we went shopping for speakers together. He had a very good executive type job, and I was just a college kid who had earned some money over the summer. We both ended up buying the same speakers (KLH model 6). He was privately flabbergasted that I spent that much money on speakers and got the same ones he did, but he didn’t say anything at the time. It was my money to spend on what I wanted. I enjoyed those speakers for many years. The ones he bought are still in my mom’s apartment, 40 years later.</p>
<p>I’d happily give him the freedom, but not at Christmas. I’d want to wait until he graduates to take my name off the accounts, like you did with his brother. I think because the funds were earmarked for education, and his education is not complete (even discounting grad school potential), there really is no reason of precedent for giving him complete control without oversight at this point. (It sounds like he has control now, just not without oversight.)
Graduation seems like the perfect time to cut the cord.</p>
<p>I haven’t read the whole thread but since you apparently already decided the funds are his regardless of whether they’re used for education or not, then it’s simple - turn the funds over to him. He’s over 21, has a well paying job, lives on his own apparently, and it’s time for him to get this money and for him to either be responsible for it or not and live with his decisions.</p>
<p>On the ‘earmarked’ question - it’s always an issue putting the funds in the kid’s name with some kind of anticipation that it’ll be used for education. I think it’s better for the parents to hang onto the money, not put it in the kid’s name, and use it as the parent sees fit. This way if the kid decides to drop out of college and start doing drugs instead, he wouldn’t have access to the money and if one kid decides to go on to grad or a more expensive school than the other then the funds can be used for that. </p>
<p>But if the intent was to give each kid some amount of money, perhaps an equal amount, and ‘hope’ they use it for education but without any restriction, then this would be the point in time for the kid to have control of the money.</p>
<p>I absolutely see it from his perspective and think he should have it based on your description on the basis of giving him the money. From the way you describe him as a successful person with a well paying job and a respectful person towards you I think he’ll be fine with it but if he isn’t, he’ll learn from it.</p>
S2 would like to try his hand at investing. Since he is less likely to have a well-paying job after graduation, I think that may need to wait til he has a 401(k).</p>