As a parent, you probably want to give your child as much as you can. This can be a particular source of frustration if you’ve always felt that finances are tighter than you’d like, but the good news is that you can give your child something much more valuable. Teaching your child how to manage money is a lifelong skill that will serve them even better than simply having the money in the first place. Young people heading off to college are vulnerable to running into financial problems because they have more freedom and more stressors than ever before. Deluged with credit card offers and watching friends spend freely, they can fall into significant debt if they aren’t careful. These tips can help you prepare your high schooler to manage money responsibly in college.
Talk About Money
Money talk is taboo in some families. This could be because it is a source of stress, or it might simply be that both parents were raised to think talking excessively about it is impolite. One or both of you may not know much about the topic yourself. However, one of the best ways to protect from financial mistakes is normalizing conversations about money in the family. You can get up to speed by reading a few books or blogs or listening to a podcast on personal finance. There are even short courses available online to teach you the basics of saving, budgeting and investing. Depending on the relationship you have with your child, you can even learn together.
Determine How to Pay for College
It’s great if you’ve been able to save up some money for your child’s education, but you shouldn’t feel guilty if that hasn’t been possible. The most important thing you can do is help your child figure out how to pay for college. This starts with filling out the Free Application for Federal Student Aid, which determines what kind of federal aid will be available, but it doesn’t end there. Federal aid is usually not enough to cover all costs, so you can help your child research available scholarships. Private student loans can fill in the gap. Your local financial institution as well as online lenders may offer student loans. You may need to cosign for them in some cases.
Work on Budgeting
You’ll need to get a sense of how much room and board will cost on top of tuition. Colleges often provide a rough estimate. With this information, you can sit down with your child and make a budget. This can be as simple as a spreadsheet, or you can use online tools or an app to help you. One useful function of some apps is that they can track your child’s spending and send them an alert if they are close to spending the maximum set for that time period in any category. You should also talk to your child about credit cards. While it may useful to have one for emergencies, any other expenses placed on them should be paid off monthly.