Preparing Your Children to Handle Their College Finances: A Simple 4-Step Guide
Sending the kids off to college can be an exhilarating time, filled with both incredible growth opportunities and potential pitfalls. One important aspect often overlooked by parents and students alike is the financial preparedness of a novice adult.
1. Teach them the art of Budgeting
With college usually being the first true taste of independence, it’s more than just academics. It’s about learning to become financially smart as well. While you may be supporting them partially, it’s crucial they learn to manage their funds independently. Helping them set up their first checking account for essentials like books, food, and clothing is a step in the right direction. However, make sure you set ground rules for spending to avoid situations like nighttime pizza feasts for the whole dorm using these funds. Make a plan for everyday and emergency expenses before they leave the nest.
2. Encourage them to earn their Keep
In the process of setting up their checking account, make it clear that they are responsible for any extra funds needed throughout the year. Finding the right part-time job that doesn’t interfere with their studies is part of the process. There are also scholarships based on job performance, such as those offered by Vector Marketing each year. Any leftover money, after bills are paid, can be used for fun activities or should be saved up for future needs.
3. Arm them with the right Tools
If this is the first time your child will be managing their money, it’s time to teach them the way around it. This ranges from simple tasks like writing checks, checking account balances, to more complex ones such as transferring money online. As their account grows, start discussing long-term saving strategies and interest rates. If they make a mistake, like overdrawing, use it as a learning moment to discuss potential consequences.
4. Give them their Space
After having laid out these financial guidelines, it’s important to let them manage on their own. Micromanaging won’t help, they need to learn from their experiences. They should realize college education comes at a cost, and poor habits like skipping classes can result in expulsion. If they run out of money, they might resort to budget meals until they manage their finances better. Such experiences in their early years are much easier to recover from, and will greatly help them as adults.
Remember, the thought of going to college for the first time can be intimidating for both you and your child. But, with the right financial preparation, you can set your child up for a successful journey into adulthood.