Going off to college for the first year is an exciting time in a child’s life. Here they’ll be able to make new friends, boost their academic knowledge and experience financial freedom. If this is the first time that your child is managing their money, you want to prepare them for what lies ahead as they embark on this new adventure
Implement a Budget
College is typically the first time a child is away from home and living on their own. Although you may still be helping fund their college education, you want your child to avoid credit card debt while they’re away. Most parents assist their child in setting up an initial checking account to be used for school supplies, books, food and clothing. But placing too much money into the account could become a disaster, as your college student may use the funds to treat the entire dorm room to pizza. Before your teen leaves for college, set the ground rules. This includes going over a plan for laundry, dinners, supplies and emergency expenses.
While you’re giving your child the initial funds to open their checking account, explain to them that additional money needed to live throughout the year will have to come from them. Finding the right job where you can juggle your work around your studies can be challenging. Vector Marketing offers scholarships to students annually earned through job performance. With over $50,000 in scholarships being rewarded to top performing college students, your child can find a flexible service or entry-level sales position that won’t conflict with their academics. The money left over after paying their bills can be used for extra-curricular activities or placed into a savings account for future purchases.
Give Them the Tools to Succeed
If you’ve done most of the bill paying through the course of your child’s life, they may not know how to manage finances and budget their money. You can begin by teaching them how to open their own checking and savings accounts. If they want to write checks, teach them the basic skills. With smartphone apps and online bill pay opportunities, you can give them an Internet tutorial for transferring funds, checking their balances and depositing checks. As their money grows, discuss saving for retirement and how to shop for the best interest rates. If they experience a financial slip-up along the way, explain what happens if their account is overdrawn. Also discuss the penalties associated with their mistakes.
Allow Them Their Space
Your instincts may tell you that you need to micromanage your teen when they first go off to college. But you want to give them their own space. If you’ve discussed a budget and given them the tools to handle their finances properly, it’s time for them to see what they can do. They have to realize that college is expensive and skipping classes or blowing off assignments will quickly get them expelled. If your college student runs out of money, they can always live off Ramen noodles until they’re back on their feet again. Letting them fail now will be a much easier lesson to learn than when they are of the adult age. If your child is looking for additional financial learning, their school may have programs availablethat they can turn to that aids students in budgeting their money. Internet sites such as Mymoney.gov also offer students guidance for managing their funds.
The prospect of going away to college for the very first time may seem daunting for both parent and student. But if you’ve financially prepared your child for what lies ahead, they’ll have a greater chance at succeeding.