You can't protect your kids from making financial mistakes, but you can provide them with the tools to learn fiscal responsibility on their own.
Question: My 20-year-old daughter works two jobs and is going back to school part-time. Her father takes her paychecks and doles out money to her as needed. He thinks he’s helping her by doing this, but I think he’s hurting her. I worry that if she doesn't start to manage her own money, she will have trouble in the future knowing how to pay bills, etc. What is your opinion? --Debbie, Canton, Ohio
Answer: First, let’s give Dad some credit for taking an active interest in his daughter’s finances. Many parents neglect this aspect of their children’s lives while they’re growing up, often to the kids’ eventual detriment. Your daughter, by contrast, has a father who is willing to take the time and effort to do what I’m sure he believes is in her best interest.
That said, I don’t think the situation you’ve described is a case of father knows best. However good Dad’s intentions are - and however much his gatekeeper-to-the-dough role might help your daughter in the short-term by preventing her from going through her money too quickly - I don’t think his approach will help her develop the financial skills she’ll need as adult to live within her means while doing things like buying a car, purchasing a home and saving for retirement.
Fact is, at some point people have to learn by doing. I’m sure Dad wants to protect your daughter from mistakes like failing to budget, running up debt, making poor investments, etc. But making mistakes, recognizing them and then changing your behavior is an important part of learning. Dad’s approach may prevent your daughter from making bad decisions with her money for now. But by coddling her this way he’s also depriving her of the very experiences that will eventually help her make reasonable decisions on her own. And isn’t that goal - for her to be able to function financially on her own?
So what do I recommend you do?
Well, maybe there’s a way to harness Dad’s willingness to help, but channel it in a more productive direction. You might suggest that over the next couple of months your husband help your daughter lay the groundwork for managing her own affairs. He could start by helping her open a checking account, savings account and sign up for any retirement and health insurance plans at work. From there he could move on to helping her create a budget and set up a system for paying bills.
As he’s doing this, he can explain the importance of each of these activities, point out some of the potential pitfalls and give her practical tips (like learning to live on your salary after you’ve made an allowance for regular saving rather than think of saving as something you do if you happen to have money left over at the end of the month).
And just so he isn’t the sole front of information - let’s face it, even well-meaning father’s don’t know everything - your husband might point your daughter to some other sources. Our Money 101 Lessons, for example, provide a quick and easy way to get up to speed on topics ranging from setting priorities and budgeting to investing and planning for retirement. (And while he’s at it, Dad might want to check out the lesson on Kids and Money .)
Your husband might also suggest your daughter check out sites more specifically geared toward students, young adults and people just starting out, such as Young Money and Kobliner.com, which is run by my former Money colleague Beth Kobliner, author of "Get A Financial Life."
And since your daughter is returning to school part-time, why not have her look into taking a course on personal finances or economics, for that matter?
This doesn’t mean your husband has to abandon his daughter financially. He can make it clear that she can come to him with questions or to discuss specific financial issues. But rather than tell her what to do or what choice to make, he should act more as a good listener who helps her evaluate options and come to her own decisions, even if he doesn’t agree with them.
In short, your husband’s aim should be to help her learn enough about her finances so she’ll eventually be able to manage them without his help, which, after all, at some point she will have to do.