Leaving for college is one of the biggest changes in the life of every kid, but also in the lives of their parents. In most cases, kids never return home, but follow their own path. With great freedom comes great responsibility and the financial one is probably the first one that has to be embraced.
If your kid is not ready to take care of their own finances, they will have a lot of problems that will add unnecessary stress to the already challenging college life. So, make sure they know what to expect and how to best deal with the new situation. Unfortunately, very few students learn about financial responsibility at school, which means that you, their parent, need to help them prepare. How should you do it?
The sooner you start teaching your kid about the importance of managing finances, the better. Make sure they understand the concepts of earning and spending money well before they are supposed to make their own decisions about it. Naturally, the exact moment when you should start this depends on how mature your kid is. Some develop interest in money matters at a very early stage, while others need more time. Nobody knows your kid better than you, so you have to make the call.
The point is that as soon as you feel they are ready, you should start teaching them. Tell them about the college fund you’ve set up for them and how it all works or let them know what they can expect from you, if anything. Although they will have an option to take a student loan or might be eligible for a scholarship, it’s important for them to know if they have any kind of financial support from you.
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Although there are different approaches to upbringing, most people agree that kids should be familiar with your financial situation. If there is a trust fund or some similar arrangement in place, they should know about it, since they need to be fully aware of the responsibility and expectations that lie ahead.
This also means that they should be informed about other options, such as student loans, as well as about all the cost of college life. Such costs include, among others, accommodation, food, entertainment and shopping for clothes and footwear. Only if they have all the relevant information, they can be able to manage their financial resources successfully.
Don’t let them rely on you
No matter how stable and strong your financial situation may be, as a parent, you need to help your kid become independent as soon as possible. College life is an excellent way to prepare for life and youngsters should embrace this opportunity to find out how it feels to earn money. Depending on their interest and amount of free time, there are quite a lot of options for part-time jobs, from working in a café, doing simple paid surveys and tutoring to doing seasonal jobs.
You may do it gradually, by withdrawing your support when it comes to some expenses such as the cell-phone bill before you completely stop sending them money. Alternatively, you may announce that at a certain point you’ll stop supporting them financially, so they have enough time to work out a plan on their own.
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Help them learn to budget
Basically, it’s very simple when you look at it. You mustn’t spend more than you earn or you should take a loan that is offered at the best possible terms and conditions. If your kid is familiar with the notion of saving money and allocating it in such a way that they appreciate the value of saving, you’ve done a great job. They’ll be able to do the same with bigger amounts and over longer periods of time later in life, which is a great skill. However, they need your guidance, teaching and help before they master this skill.
In a nutshell, the sooner you introduce your kid to the world of finances, the better prepared they will be for their independent life and leaving for college is the first major checkpoint along the way, rather than the moment when you start thinking about it.