My least favorite task to work through with clients is reviewing their budgets these days. It seems everyone is hemorrhaging cash. Sadly there are few easy solutions– either the parties 1) increase their income to meet their household budgets; 2) decrease expenses; 3) cash-in assets to meet the deficit; or 4) take on more debt to meet expenses.

Everyone needs to be able to afford decent housing, food, clothing, transportation, and medical care. So the painful exercise is cutting the “extras” like travel and entertainment, or country club memberships. It is very hard to tell people which of these expenses should be cut, but obviously it is the discretionary (non-necessary) expenses that have to be carefully reviewed and eliminated wherever possible.

For many clients in the DC Area, one of the first big ticket items to consider eliminating is private school tuition for kids under 18. In the DC Area, these tuitions can range from $15,000 to $35,000 per year. Given the choice of being able to save for college and meet the household’s necessary expenses, or paying $1000 or more a month on the luxury of a private education, many parents are finding it necessary to eliminate this expense.

We all have to make difficult decisions these days, and yet I hope we can all act in a way that takes the children’s best interest into account as the primary concern. We need to reassure them that we will continue to provide for them, and that they are not at fault for any of the problems that need to be addressed by the grown-ups in their lives. The economic crisis was created by adults, and we have to fix it, not pass this on to the next generation.