Sending your children off to college is an exciting milestone in their lives, but it also marks a significant financial transition for both you and your child. As parents, it is crucial to have open and honest conversations about money with your college-bound kids. These discussions can help them develop financial literacy, make responsible financial decisions, and set them on a path to financial success. In this article, we will explore a few tips for talking to your kids about money before they embark on their college journey.
Start Early
Teaching children about money should start at a young age. Initiate conversations about saving, budgeting, and the value of money long before your son or daughter head off to college. Use everyday situations, such as grocery shopping, buying gas, or paying bills, to explain financial concepts such as budgeting to instill good money habits.
Set a Budget
Help your children create a realistic budget for college expenses. Sit down together and outline all anticipated costs, including tuition, textbooks, housing, meals, transportation, philanthropic donations, savings, and entertainment. Discuss the importance of tracking expenses, making adjustments when necessary, and sticking to the budget to avoid unnecessary debt or financial stress. Set a time to check in with one another after a few weeks to see how adherence to budget is progressing. In another couple of months, check in again.
Encourage Part-Time Jobs or Internships
Encourage your child to work part-time or secure an internship during college. Part-time jobs can help college-aged kids experience financial independence. Both internships and part-time jobs can help teach them the value of hard work and time management. Discuss the benefits of saving a portion of their earnings and how it can contribute to their financial well-being in the long run. Having short-term goals helps your child mentally separate money for different purposes.
Discuss Financial Responsibility
Understanding the concept of financial responsibility and the consequences of poor financial choices are life-long lessons. Encourage your son or daughter to prioritize needs over wants, differentiate between essential and discretionary expenses, and make informed spending decisions. Discuss the importance of saving for emergencies and setting aside money for future goals.
Introduce Investing
Introducing kids to basic investing concepts can be invaluable for their long-term financial success. Teach them about different investment options, such as stocks, bonds, and mutual funds. Ask what stock they would buy and why if they had $1,000. Discuss the importance of diversification and thinking long-term. Encourage them to start investing early, even if it’s with small amounts. Include them in meetings with your financial advisor for a first-hand experience.
Utilize Available Resources
There are various resources available to college students on campus, such as financial aid offices, financial literacy programs, budgeting workshops, and seminars. Explore these resources together and discuss how they can be helpful. These resources can provide valuable information and support to help your child make informed financial decisions.
Talking to your college-bound kids about money is an essential step in preparing them for financial independence. By starting early with open and honest conversations, you can equip your child with the necessary knowledge and skills to make sound financial decisions throughout their college years and beyond. Remember, these conversations are ongoing – they should not stop once your child begins college classes. It is essential to provide ongoing support and guidance as they navigate the world of personal finance.
Sources
“Money as You Grow: Help for Parents and Caregivers”, Consumer Financial Protection Bureau, accessed on May 31, 2023, www.consumerfinance.gov/consumer-tools/money-as-you-grow/
“10 Things Every Kid Should Know About Money by Age 18”, Janet Bodnar for Kiplinger, accessed on May 31, 2023, https://www.kiplinger.com/slideshow/spending/t065-s003-10-things-to-teach-your-kids-about-managing-money/index.html
“11 Talks About Money to Have with Your College-Bound Kid”, Niche, accessed on May 31, 2023: https://www.niche.com/blog/money-talks-to-have-with-your-college-bound-kid/
Disclaimer
The content in this article is provided for informational purposes only and should not be relied upon as recommendations, financial planning advice, or advice about health. We encourage you to seek personalized advice from qualified professionals regarding all health and personal finance issues.
