Dave: My daughter is 19, and she has a spending problem. Although she works part time while she’s in college and during summers, we’ve allowed her to get into the habit of spending half of what she earns, along with some of our money, on fun stuff. Do you have any advice on how we can turn this around during her last three years of school? — Lynn

Lynn: I think you’re probably going to see a pretty negative reaction when you cut this kid off, and you need to be prepared for that. I also think that cutting her off is the best thing you can do for her right now.

You need to sit your daughter down and have a long talk. Explain to her that she’s wasting a bunch of money — hers AND yours — and that’s not a responsible plan. I think you also owe her an apology for being an accomplice to this kind of thing, and for allowing her to live this way for so long.

She’s going to experience some pain for a while, because she won’t be able to maintain the lifestyle to which she’s become accustomed. But you guys have to draw a line in the sand where money is concerned. Tell her that you’ll give her a set amount each month — along with some for college — but the rest is up to her. If she doesn’t earn the money for all the other stuff, then the other stuff doesn’t happen.

As part of this, show her how to make a budget. Make sure she understands how to keep track of how much money comes in and where it all goes. Make sure she understands, too, that if she calls home and asking for more money, the answer is going to be no.

All this needs to very firm, but loving. What you’re doing here, Lynn, is having “the talk” with her and making sure she has the tools and the knowledge to make it all work. Then, you check up on her from time to time.

She won’t be able to change her habits in the blink of an eye, but by checking up on her you can answer questions and help her work through things!

Dave: I was wondering if you recommend including major, future purchases into your monthly budget. If so, how far in advance should you do this? — Anonymous

Anonymous: I’d start putting money aside and including it in the budget as soon as I knew I was going to have a need for the item. When you wait until things go wrong or something breaks down, then you’re liable to find yourself in a mess and the victim of your own poor planning.

Let’s say you’re pretty sure you’ll need another vehicle in a couple of years. Go ahead and start putting the money aside now! Decide on a price, and then do the math to see how much you’ll need to save every month to make it happen.

If you can do it faster than two years, that’s great. And that’s one of the reasons I want to help get people out of debt. It’s a whole lot easier to save money when you don’t have things like car loans and credit card payments hanging around your neck!

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