Seeing your child go away to college is both exciting and challenging. You’re excited for the next step in their life, but you’re sad to see them leave your home.
As you prepare for your student to attend college, one thing that’s important is ensuring your child knows how to manage money. Not only is it easy to run up bills in college, but preparing your student financially will make a huge difference in their future after school.
How can you help your college student make wise financial decisions? Here are some tips.
Help Your Teen Make a Budget
The best thing you can do to help your student understand money is to show them the flow of money in and money out. A budget puts it on paper in black and white and forces your teen to recognize what recurring bills look like and the importance of earning money to cover them.
Does your teen have a lot of bills? Normally, no. But you can let them take care of bills that you normally cover, such as car insurance. Show them your monthly accounting for the household bills, such as gas, groceries and regular bills like the electric and water statements.
If you’re concerned that your student will pay too much as a young driver, there are steps you can take. For instance, contact a reputable company to compare rates. Freeway Insurance reviews give the company high ratings for helping customers find affordable rates, even if they’re young drivers. You can also look for discounts for good grades, safe driving classes, and more.
Credit makes it easy to buy what you want — which is a blessing and a curse. People of every age struggle to manage their credit, so giving your student a head start in understanding it is essential.
Being responsible with credit means discerning between needs and wants. Talk to your teen about how credit scores work and how interest rates matter. Consider getting them a starter credit card with a low balance, and talk to them about how to use the card responsibly.
Young people generally don’t think anything bad will happen, but as a parent, you know better. Talk to your student about saving money in case there’s a financial need, like a car repair, unexpected bill, or other situation.
Saving is also important so your teen can meet future goals, such as moving to an apartment in the later years of college and after. Having your student create a savings plan can help them understand how expensive living off-campus can be and what they’ll need to do to prepare.
Helping Your Student With Financial Success
As a parent, you can teach your college student the basics of budgeting, saving, and credit to help them be financially successful both at school and in the future.
It’s challenging but well worth the effort. Your student may make mistakes, but they can recover and learn what to do going forward.
Wishing you and your student the best financial future!