For parents, preparing their kids for college can be a stressful time. While they are getting excited to meet new people, decorate their dorm, and pack everything for their first year on campus, parents are often focused on the nitty-gritty details. This often involves preparing their children’s finances and filling out paperwork among many other things.
As a parent, it’s important to make sure your child knows about the responsibilities they’ll need to handle in college. Helping them understand money management is especially important, as this will help them be better prepared for when they graduate. Here are some first steps to help teach your child financial independence before college.
Determine an Organization Method
Working on developing a budget with your child who is college-bound can help them be better prepared to manage their money and avoid overspending. Generally, your kids will have a limited amount of money each semester depending on what they’ve saved up, and if they have any type of financial aid or work-study income.
To help them create a budget, work with them to calculate the expenses they expect to have each semester, along with how much money they will have to spend. Write down each of these by category, and then determine how to best allocate their money. Generally, you should create categories that distinguish between necessities and other non-necessities, with a priority on payments that are not negotiable such as food, textbooks, and school supplies, as opposed to non-negotiable payments such as parties and socialization.
In order for your child to best track their budget in college, they could utilize a digital budgeting app so that they can always have a handle on their money whenever they’re on the go.
Set Up Financial Accounts
Getting your child’s financial situation in order also involves helping them get a bank account, among other financial accounts such as credit cards and loan accounts. If they don’t already have one, getting them a savings and checking account is a great way to help them be fully in control of their money.
One great way of doing this is by helping them sign up for a digital banking platform, which can allow them to control their finances from their laptop or mobile device. These often have additional features that can help them be more financially responsible, such as automatic savings and fee-free overdraft protection. These services can help students save money during the semester and contribute to their life savings over time.
Discuss Credit and Loans
Finally, helping your child understand debt, credit, and loans will keep them from acquiring a low credit score throughout college or falling behind on student loan payments. Discuss with them the importance of meeting any credit card payments they have on time and paying them off immediately instead of letting the debt pile up.
You should also explain how much money they will owe for student loans and what they will need to do to pay these off after graduation. This will give them a better sense of their financial responsibilities and motivate them to be on top of their finances. You can go about this by giving them access to their student loan accounts and helping them stay aware of how much they will end up owing after graduation.
Overall, knowledge about debt and loans will come with the added benefits of motivating them to be more financially independent, so that they will be in a better position when they graduate. They may even work to find ways to avoid debt while in college, and in some cases, they can even begin to pay off loans while still in college.
Helping your child prepare to become financially independent is tricky, especially since they’re getting ready to go into a new environment. However, by teaching them the right skills, they’ll be prepared to manage their money and stay financially savvy in no time.