High school grads hitting the road to college may need a little financial education before they go. They’ll no longer have Mom or Dad to rely on for dollars and sense.
Without proper education, they might end up like many new college students: broke and on the path to a lifetime of debt.
A lunch here.
Parties, parties everywhere.
Debt becomes a way of life.
Many students are clueless about what interest does to a person’s debt. If they go nuts running up credit card debt for things like eating out with friends and shopping, they’ll likely dig a hole they’ll have a hard time getting out of later in life.
This sort of behavior also establishes their patterns for adult spending habits — long after they’ve left college behind them.
Teach your children well. By instilling responsible financial behaviors in them, you’ll enhance all aspects of their lives.
Here are some key factors in prepping your college bound student for financial success:
Start the Conversation
Open conversations about money are a great place to start, and they’ll also help to foster a positive relationship between you and your children. When money is a taboo subject, it leads to poor financial decisions.
But once your kids have a clear understanding of how you view and handle finances, they’ll be that much closer to adopting your best habits.
If you don’t have good habits, this is still a terrific opportunity to connect and teach. You can show your kids you’re human and that you want a better life, so you’re willing to go through changes and transitions with them. Shift from dictator to comrade in the money war. Every struggle is easier when someone is struggling alongside you.
Explain the Alternatives
Teach your child that credit cards aren’t the answer; more often, they’re the problem. Show them through action and dialogue how to best handle their many options. When you want to buy something but don’t have the cash, make casual comments about why you’re not getting it, even though you’d like to. Teach your child to save and wait if they want something out of their budget.
Boost Them Up
Reinforce your child’s self-confidence so they won’t be victim to peer pressure. When they have a strong sense of self and a good knowledge of money, there will be little that friends can say to sway them into meals out, movies, and shopping sprees they can’t afford.
They’ll think first about the offer and the money involved. Then, they’ll feel good about standing firm in front of the whining and cajoling that usually follows a “no.” They’ll happily return to their dorm and hang out with friends there.
Give Them a Short Leash
While these are all great suggestions, there must also be some leeway in their Mom&Dad Finance 101 lessons. If they aren’t working, they’ll still be reliant on you, even if only from a distance.
Giving them some spending money to manage on their own is a great way to help them see their finances as finite. Credit cards should never be an open line for unlimited spending, so give them a pre-paid card (safer than cash in a dorm or busy apartment anyway) with a fixed amount of money. This will help them learn to balance needs versus wants.
Teach Them About Frugality
Frugality is often the last thing that college students are thinking about. They’re busy keeping up with friends and their purchases — friends who don’t necessarily know the value of money, or how to handle it wisely. Teaching them how to shop for bargains before they go it alone will help them extend that limited budget. That way, they’ll have more money for the things they want, while still getting what they need.
Teach them to measure value and where and when to find the best prices. You want your child to learn that not all sales are the same and there’s more to saving money than simply not spending it.
These are all hard lessons for young people to learn. And they may not get it right the first, fifth, or fiftieth time. Your patience and guidance will eventually set in and they’ll emerge from Mom&Dad Finance 101, smarter, in less debt, and altogether healthier and happier people.
Btw, there's a pretty nifty tool that motivates your kids to do chores. It's called MyJobChart.com. With a free account, they can earn points for finishing jobs you assign them, good towards free merchandise. Give it a try. It's completely free!