On the Family Finance Front

by Colette Moran

The Wall Street Journal had two pieces on family finances yesterday that caught my eye. The first from Rebekah Bell is about graduating from college debt-free. She starts her analysis with these sobering statistics: 

Figures from the Federal Reserve Bank of New York reveal that 37 million Americans have student loan debt. About two-thirds of students receiving bachelor’s degrees borrow to fund their education, with the average student debt at an all-time high of $26,000. Total student-loan debt is estimated to be $1 trillion.

Only 38% of borrowers are making payments on their loans. The rest are either still in school, postponing payments or not paying them back. Almost one in 10 students who started repayment in 2009 defaulted within two years. At least 40% of student borrowers put off a major purchase such as a car or home because they couldn’t afford it, and many are delaying marriage and families.

She goes on to suggest several strategies to help avoid crushing college-loan debt, from accumulating as many “non-premium rate” educational credits from varying sources (including high schools, online courses, and summer-school classes at a local community college) to several ideas for generating income during your college days. Read more here.

Then I saw an opinion piece by Demetria Gallegos about parents’ veto power on their children’s purchases. With kids carrying hefty balances as they stash away generous gifts from grandma and money from lucrative babysitting gigs, it can be difficult to teach them to forego pricey items and to think about the future. 

[My husband] John and I have had to articulate a policy around savings, and how the girls can spend it.

The general principle: “Until they’re 18, we have the right to deny them spending it on things we don’t approve of,” says John. “Our name is on the bank account.”

The girls buy this argument – up to a point.

“I understand if you keep us from using it on things like drugs, but since it’s our money, it should be our decision,” says Emily. . . .

Jamie, 16, agrees that John and I are within our rights to control withdrawals. “You should have more influence in our bank accounts,” she says. “You’ve been putting money in that account for years. That’s your investment in us, so you should have a say in it. . . .Our insistence on holding the reins, however, doesn’t mean that the money is untouchable. In the same way their allowance teaches them to manage cash in hand, we want the savings account to give them lessons in delayed gratification. 

I know it’s a struggle in our household. More here.




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