As your teen prepares to go off to college for the first time, there are many things they’ll need to learn before they go. How to sign up for classes, set their own schedule, and pay their bills for the first time. Most importantly, they’ll have to learn to manage their money well.
Hopefully, your teen has already had some practice budgeting through a summer job or allowance. However, as a college student, they’ll be responsible for their food, gas, rent, utilities, and more. It comes as no surprise that most teens struggle with this the first year or two, but teaching your child these lessons early will help prepare them to be successful in college.
Here are some tips to help your child transition to college:
Tip #1 – Teach them that bills always come first.
When your child is without the watchful eye of parents for the first time, they will be tempted to spend their money on fun things they’ve never had before – whether it be fast food, or that video game console they weren’t allowed to have in high school. However, if they’re not careful, they won’t be able to afford the essentials and will panic when rent is due. Make sure you go over a budget with them and teach them that they should always have enough in the bank to pay bills before spending for leisure.
Tip #2 – Be clear in how much support you will provide.
If your child goes to school full-time, they may only have time in their schedule for part-time work. This can make it difficult to pay for some necessities. Therefore, it is essential to be clear on how much financial support you will provide and stick to that plan so they learn to be responsible for the rest. If not, they may call you for cash more often and never learn important skills to provide for themselves and manage their resources.
Tip #3 – Teach the value of saving.
While your child may be living on a tight budget, it’s important to teach them to save while in college. Even the smallest savings can help if they lose their job, have an emergency, or want to do something fun over the summer. As little as $50 a month can add up and help them feel more secure while away from home.
Tip #4 – Use credit cards wisely.
Helping your child get their first credit card can be a wise way to help them start building credit and ensure they can pay for emergencies like car repairs and minor medical bills. However, the temptation to use it irresponsibly will be strong, so make sure your student knows the responsibility of a credit card and takes it seriously. If used irresponsibly, credit cards can harm their credit instead of helping it, so have a conversation about responsible payment before signing them up.
Tip #5 – Remind them that college is an investment.
Most kids don’t realize the magnitude of the investment that is a college degree. It’s been shown repeatedly that college graduates earn more on average and will generally have an easier time in their career fields upon completion. Still, college is expensive and sometimes comes with massive amounts of debt. They need to remember that the return on investment is much higher if they finish and make good grades. Studies show that 5% to 50% (depending on degree program) of college students drop out and that investment becomes an expensive mistake.
Tip for Parents – Let them learn and fail.
There will come a time when your child calls you in a panic or in tears because they’ve spent all their money and can’t afford rent. This moment is a powerful learning lesson you’ll need to handle carefully. While you don’t want your child to lose their apartment or dorm, you also don’t want them getting used to mom or dad saving the day after they’ve spent all their money on fun. If you ever have to send them money for something they should have budgeted for, come up with a plan together for them to pay you back. This ensures that they don’t learn the most brutal way by being kicked out of college or ruining their credit, and still take responsibility for their finances.
With these tips and a little bit of learning as they go, your child will be well-equipped to handle a college campus. You can start teaching these lessons as early as you want, just as you can start saving for college at an early age through various investment avenues. If you’re ready to learn more about college saving plans, talk to OneAscent today.