22-year-old college student blows her $90,000 college fund and blames her parents

[SheilaT]

78. Sounds as if she may have been left the money outright,

rather than in a 529 plan, or in a UGMA (Uniform Gift to Minors Act) account. It also matters which state she lives in, as some allow full access and control at age 18, others not until age 21.

We lived in Kansas, which is an age 21 access and control age, right next to Missouri which is age 18. My childrens' grandparents were very generous and gifted them with money, as well as set up a 529 account for each. My older son has always been very responsible and frugal. Younger son was far less so, especially growing up. By the time they were in their mid-teens we made sure they knew about the money, saw how much there was, participated in investment decisions, but could not have free access to the money.

I honestly think if younger son had been able to get and spend the money, much of it would have been squandered by the time he was 21. Instead, by that age he appreciated what he has, treats it as the irreplaceable nest egg it is. Recently when his car completely died and he needed a new one, he consulted with me and bought a good used car.

Had the money been left to Kim as a 529, she could only have used it for legitimate school expenses: tuition, room & board, books, fees, maybe a couple of other items. Not a trip to Europe.

I am very pleased that the parents are not willing to just give her more money.

A while back when I was attending my local junior college, a noticeable number of kids in the classroom had spent a year, maybe two, at a four-year school where they'd partied and done badly, and for every one the parents had said they weren't underwriting any more of that crap. Now the kids lived at home, and some of them had to demonstrated good grades before the parents would pay for the semester at the community college. All of those kids recognized that they'd blown it before, but were very glad of this second chance.

This young woman, while something of an extreme example, is one day going to be carefully explaining why, despite an income that puts her in the top 10 or 15 percent, cannot possibly afford to save a penny. And I see an awful lot of that out there. Most people live exactly at the edge of their income, often a bit beyond, and think getting a brand-new car every few years is simply the way you live. And owning the nicest possible home, with a mortgage payment that's 40% of their income is absolutely okay.

I do have some hope that this young lady will learn her lesson.