When a teenager leaves for college, they’re not just going to a new school to learn about some new subjects. They are entering a phase of their lives where they will be learning about how to live an entirely new life; and hopefully, if all goes well (and as planned), they will earn a college degree so that they can enter into the world as a capable and self-sufficient adults.
However, there’s absolutely no way that this dream can become a true reality without them learning how to become financially savvy. When it comes to life lessons about money, some can only be learned through trial-and-error, but others can be taught by providing your teenagers with some great information that they can apply even while in college. If they get into the habit of using them then, it will make “the real world” a lot easier to deal with later.
Here are some tips for teaching your kids to be financially responsible in college.
Cut a couple of the apron strings. If your child has been used to you giving them money for everything, they will continue to do so. If this is the case in your household, college is a great time to begin the weaning process. If they’re getting a full ride from you (tuition, room and board), then encourage them to get a part-time job or to get into a work-study program for extra spending cash. If you’re only paying a part of their education, consider matching whatever money that they can make on their own each semester. They won’t be given money for nothing in the workplace. They might as well start getting used to that fact now.
Encourage savings accounts. Discourage credit cards. There are a lot of adults that will tell you that they are in debt now because of a credit card that they got back while they were in college. Unfortunately, there are a lot of credit card companies that will encourage your teenagers to sign up for one even without proof of income or established credit. Credit cards are not free money. Be sure to educate your kids about the pros and cons of having one, the interest rates, how it affects one’s credit and if having one is even necessary. If it is, help them to pick one that will be the most financially beneficial to them long in the long run. No matter what conclusion you come to, we all know that credit cards are about spending while savings accounts are about saving and saving is always a good thing. There’s a good chance that your child already has a savings account (right, parents?), but as they are learning more about finances and earning an income, educate them more about the benefits of saving, how much they should save and how not “spending it all in one place” always proves to be a financially responsible decision.
Education costs. Teach them how to earn it wisely. If a teenager is on scholarship, you are paying for their schooling or even if they qualify for a student loan, sometimes they still don’t realize how much the price of their education actually costs. That is until they are put on academic probation, you expect them to pay for their own room and board or their student loan goes into default following graduation due to non-payment. After their freshman year (it gives them time to get adjusted to college life), take out the time to discuss with them, at least once per semester, the price of their education; that no matter what, it’s not a “free ride”, but an investment into their future. Itemize what each thing costs (tuition, room and board, books, food, gas, entertainment, etc.) and explain to them that it’s a lot like how life will be following graduation because when it comes to managing money, no matter how much or how little, there always needs to be a budget. That way, once they enter into the workplace or should they decide to get a graduate degree such as enrolling into one of the online nursing masters programs, they will be better equipped to handle the costs that come with living life. And they will be able to live it to its fullest!