SENSE & SENSITIVITY
Young people need financial savvy

DEAR HARRIETTE: I liked your response to Chris, of Hartford, Conn., whose mother was upset that Chris had withdrawn from college without consulting her. Young students are often not aware of family financial considerations, beyond tuition and fees, attached to attending college. For example, college students are covered by parents’ health plans; high school graduates who are not in college are not covered. This can be financially devastating to a family if the child has a job that doesn’t include good health care, and the parents may be stuck with high medical bills if the child has health problems.

If the student has attended college and received loans, and then drops out, the loans become due earlier than when they or the parents had planned. With multiple children in school at the same time, there may be higher financial aid available to the others that they will lose if one stops attending school. There may be child support, Social Security, tax breaks/deductions/credits or other income considerations. I often hear of teenagers wanting to take off a year to find themselves, or even to save money for college, but that can be a bad financial decision not only for them, but for the rest of the family also. I am a financial planner, and I often deal with the repercussions of the ignorant youth who just didn’t think through, or thoroughly discuss with others, decisions that seemed simple to them. As a parent, I know we never seem to think our children are old enough to share economic information with, and then it is suddenly too late. — Barbara, Dallas, Texas

Barbara: You hit a key point. Many parents shield their children from any significant information about their family finances. In turn, many young people mistakenly believe that the well will never run dry, and more, that their decisions — which they yearn to make independently at this stage — have no real consequence on their family’s future. I also recommend talking with your children from a very young age about how to save money as well as how long it takes to earn the dollars they want to make purchases. Checks and balances learned early on should help to form responsible adults later in life.