BIRTHDAY PARTY CRAZY

Remember when kid's birthday parties featured “Pin the Tail on the Donkey”, ice cream and birthday cake?  The guests were a few classmates and the birthday kid's grandparents.  At some point everyone would gather around the cake and sing “Happy Birthday”. Gifts would include a car model or some doll clothes.  Hula hoops were pretty cool.

Those days are gone.  We have entered the age of “Extreme” birthday parties.  “Pin the Tail on the Donkey” has been replaced with a live donkey.  The birthday cake has to be a creation worthy of a Food Network competition and follows a catered meal.

The pressure and expense of the “birthday circuit” have become impossible.  In addition to the soccer games and music lessons, the already over-busy kids have invitations to these enormous parties many weekends out of the school year.

According to family therapist Bill Doherty, one Minnesota family rented a bar for a princess-themed party.  Guests were picked up in limos.  The adults wore formal attire.  There was live music and even  champagne for the adults.

The birthday “princess” was turning 4!

Parents don't want their child to feel less important than their classmates and so the cycle continues.  The key here is to adhere to your own value system.  It is great to mark events such as birthdays but it is important to keep perspective.  As with most of our milestones, use this as a teachable moment.

When my daughter was at Dalton she gave a wonderful pair of mittens to one of her friends as a birthday gift only to have the kid come to my daughter's birthday and give her an expensive stereo system.  We called the mom, thanked her and returned the gift.  The next day I called the Class Mother and told her there was going to be a new gift rule: gifts had to be no more than $12.00.

Many children have three or four birthday parties each year: one for classmates, one for nuclear family, one for family friends and one at school.  It would be OK to cut this in half.  There can be one party for youngsters and one for adults.  Keep the list short.  Keep the party simple. The goal should be for the birthday child to enjoy spending time with friends and family.

KEEP THOSE GRADES UP!

In today's economic environment, higher property taxes and cost of living, frozen wages and withered home equity have put the crunch on middle-income parents.  Many no longer have the savings or even borrowing power to keep up with the ever-rising cost of education.

A family making $75,000 a year might have to contribute $10,000 a year toward the cost of of college before qualifying for need-based aid.  For a family with $150,000 in income the contribution jumps to $35,000 a year or more.  The need for student loans has skyrocketed.

Universities like Tulane are offering sizable amounts of aid based mostly on academic promise in order to bridge the loss of brighter students to less-expensive public colleges.  According to an Education Department study, the percentage of students receiving merit aid since 1995 has grown to significantly rival the number of students with need-based aid.

Merit aid is one of the most promising answers in college financing now.  Students can be attracted to schools for any number of emotional reasons including the look of the campus, having a friend also attending or even the climate.  Then the parents have to figure out how/if they can pay for it.  Remember your budget.

Put financial consideration high on your list when making the college “wish list”.  Be sure to include schools which offer substantial merit aid.  Look at schools that will want you and be willing to help out.  The University of Miami, for example, awards merit scholarships averaging more than $23,000 a year to nearly one quarter of it's freshmen.  Tulane offers similar statistics.

Good grades are not only necessary in order for your child to get accepted by the college of choice, but to help pay for it.  It is important to note that once accepted, the student has to continue to get good grades and meet set standards in order to renew the merit-based aid.

IT SHOULDN'T TAKE A TRUCK TO MOVE INTO THE DORM

Gearing up for college move-in is another chance for teaching budgeting and common sense.  Having a teen leave the nest for the real world is a milestone but we shouldn't try to assuage our anxiety with unnecessary shopping and spending.

First your child needs to find out what is provided by the school and also what is permitted in the dorm room.  Keep in mind that dorm room space is limited. Now it's time for a list.

You and your young adult need to make three lists: “must-haves”, “wants” and “bring from home”. Remember to research prices and list them with each item.  Set a realistic budget and stick to it.

Before you make any purchases or decide what to bring, your child should contact the roommate.  They can save money and clutter if they don't duplicate items that they can share.  For example, one can bring a microwave and the other a floor lamp or stereo.

Remember that this is your child's time to grow.  Let them make decisions.  Having matching bedding might be a priority for you but not your son or daughter.  You are not the one heading off to college.  Don't obsess about remembering every last sundry, snack or notebook.  Even the most remote campuses have commissaries and book stores.

Get ready to start baking your kid's favorite cookies to put in those “care packages”!

BACK-TO-SCHOOL BUDGETING REFRESHER

It's back-to-school time again and that always means it's also “back-to-spending” time.  This season people are projected to spend nearly $670.  This is a great time to teach your children.  Let's get back-to-basics.  Start by helping them make a spending budget for the two major back-to-school categories of supplies and clothing.

Begin with supplies.  First get a list of all the recommended supplies your children will need for the school year.  “Need” is the important word to focus on.  Give each child a small notebook and show them how to list each item and price.  Ask what supplies they think they will need or want for this year.  Again, they should write down the item and its price.  I recommend that you should pay for all the “needs” and have them pay for their “wants”.

Next, do the same thing with their clothing budget.  The list should be specific, detailing how many of each item they think they will need.  The total cost is likely to surprise you and your child alike.  After getting the totals, you decide the final amounts and prices.  If they say that the “need” three pairs of popular boots at $200 each, you get to say “I'll pay for $40 boots”.  We know this isn't going to be easy but this is a worthwhile lesson.

Your children can now start to understand the dynamics of planning, and most importantly, budgeting.

ARE THINGS LOOKING UP FOR STUDENT DEBT: NOPE

Generally, debt is down for the American consumer. Mortgage debt and credit card debt is being paid down – but student loan debt is not. It stands at roughly $1 trillion and rising.

Why? For starters, during the recession many people decided to return to or stay in school because job prospects were so lousy. People were hoping to wait out the recession and improve their chances of getting a job when it was over.

Student debt has also increased because of the rapid rise in the cost of college tuition, which is growing faster than inflation. Also, Mom and Dad may not be able to contribute as much as they had expected to, because they may be unemployed.

Some of the college debt burden is also falling on students’ parents and grandparents; almost 17% of outstanding past-due student loans are held by those over 50, and almost 5% by those over 60, according to an economist at Barclay’s Capital. This is the time parents and grandparents should be saving for their retirement, not worrying about college debt.

My advice? Remember, your offspring can borrow for college, you can’t borrow for retirement.

The Reinvented Wedding

Twenty-seven thousand dollars is a lot of money for a party even if it is the most important day of your lives.  According to theKnot.com and WeddingChannel.com, that's what the average wedding now costs.  Costs are even higher in the more expensive markets such as New York City and Chicago.  This is a good and sensible reason for the recent trend toward more homespun and creative wedding receptions.

In this sluggish economy more and more couples are turning to simpler, intimate and sometimes off-beat ways to celebrate.  According to Amy Kaneko, an events planner in San Francisco, “the backyard is the new ballroom.  “I think people are waking up to the insanity that is the wedding market” said Marin County, California caterer Stacy Scott.

Couples are opting for simple ceremonies followed by downsized receptions including picnics, barbecues or simply inviting only closest family and friends utilizing such venues as public parks, backyards or the living rooms of friends or family.

Another reason for the new trend is that marrying couples are now at record high ages. According to Brides Magazine, the average age of the bride is now 27 and the average age for the groom is now 29.  Couples are busy and have to do their planning in the midst of work and other pressing commitments.  These simpler festivities can take as little as two weeks planning and coordinating.  Often guests are asked to bring their own chairs and cushions.  Some couples have even gone the “covered dish” route asking friends to bring food and beverages.

Several years ago I worked with a couple to budget a wedding for a feature on Oprah.  We put together a complete Las Vegas  wedding for ten thousand dollars.  The key, as with most financial decisions is having a budget and sticking to it.

It is essential that the marrying couple and family [if they will be shouldering some of the cost] assess their finances, make a budget within their means and meticulously adhere to the plan. You must accurately assess all costs that will be involved and be honest and realistic about them.  Also include a category for unexpected costs.

Stay within your means and don't let your emotions get in the way of your financial health. If you can't afford an exorbitantly priced new designer gown, consider buying a gently used one or perhaps borrowing a gown from family or a friend.  You can always have the dress tailored to fit you which is far more cost effective than buying a new one.  If you are going to have your reception at a restaurant consult with the establishment to find a cheaper time of year or day of the week.  It's OK to break with tradition.

These are all great ideas even in better economic times.  Often the year of preparation and lavishness of the traditional wedding can overshadow the real meaning of the gathering.  These less formal, less frenetic celebrations make for a special day that everyone can enjoy and remember.

There's No Place Like Home

Traditionally, “fleeing the nest” has been a rite of passage for kids heading off to college.  Both children and parents look forward to the new life-stage.  Kids eagerly anticipate their freedom.  Parents dream of a clean, vacant extra room in the home.

According to a recent study from the largest student lender, Sallie Mae, this year more than half of the students surveyed lived at home while attending college.  This is up nearly 9 percent from just last year with most of the rise coming from families with over $100,000 in yearly income.

The study also noted that there has been a noticeable change in the way college is paid for overall.  Students are carrying a larger percentage of the cost, up 6 percent from four years ago. Parents are paying 7 percent less.

Along with choosing less expensive colleges, remaining in the family home has become another popular tool to help offset  the high cost of higher education.  Postponing the “fleeing of the nest” is not, however, without complications.

I discuss this topic in Money Still Doesn't Grow on Trees in a chapter on kids moving back home but it also applies to kids who don't leave.

Both parents and kids must have a set of rules.  These rules won't be the same ones that you used when your kids were minors and you were completely responsible for them but your kids are not your roommates.  Remember, it is still your house.

Two very important issues that you need to clarify up front are “who pays for what” and “my house, my rules”.  Be specific.  Negotiate a fair contract.  For example, you're probably not going to set up a curfew but you want to be notified if your kid isn't going to be home when expected.  On the other hand, you're not going to enter his or her room to gather dirty laundry from the floor. Coordinate on a reasonable budget to determine “who pays for what”.

Parents, forget those paint swatches and hold back on ordering that new treadmill.  That “extra” room might not be vacant for a few more years!