College is a thrilling time for new students; filled with lots of excitement and more than a few challenges as well. If you’re a parent looking for more ways to give your teen the best possible start to their college experience, don’t forget about personal finance skills. Teaching your kids about personal finance and how to manage their money can have a big impact on their life in college, and well into the future.
To get you started, here are just a few ideas on how to talk with your college-bound kids about budgeting, saving, managing money and other key personal finance skills.
Talk About Budgeting
For many teens, college is the first time that they’ll be personally responsible for managing expenses like food, clothing and school supplies. Make sure your teen has a handle on how to budget. You can start by simply talking about the basics of money in versus money out, calculating predicted expenses, and setting aside some money for savings, emergencies and fun. Check out budgeting apps together, and let your teen choose and download one that appeals to them.
Choose a Credit Card
While a credit card isn’t right for every college student, this can be a good time for young people to start building their credit by having a card. Many parents also like the security of knowing that if worst comes to worst, their student has a line of credit in case of emergency. Check out credit cards designed especially for college students, such as the HUECU student credit card which offers great perks and rewards such as cash back, without hidden fees.
Cover the Basics
As an adult and a parent, it’s a good bet you’ve been managing your finances for decades. Keep in mind that your teen doesn’t have the same foundational knowledge – so help them to learn the basics. Talk about terms like mortgage, credit card balance, credit score and debt, and show them what these things mean in terms of their own life. If your teen can start college understanding that paying their bills on time will support their ability to rent an apartment or buy a car in the future, they’ll be in a great position to continue building their financial literacy.
Evaluate Their Accounts
In all likelihood, your child already has their own savings or checking account. Before they head off to college, take a look at this account together and discuss if it’s still the right place for their money. Get your teen engaged in deciding for themselves if the fees, terms and benefits are fair, and whether or not they might be able to get more rewards by switching to a different account. This is a great opportunity to get your teen thinking critically and independently about personal finance.
Go Over the Risks
While it’s never a good idea to scare kids when it comes to concepts like money and budgeting, any frank discussion around personal finance skills should include some warnings about the potential risks of managing money irresponsibly. Incoming college students need to know that the decisions they make now could affect their financial health for a long time to come. Unpaid credit card bills, overdrawn accounts and overspending could prevent them from achieving future goals such as owning a home, so make sure your teen knows the risks of not being financially responsible.
Help Them Think Long Term
Good personal finance skills are all about thinking long term. Teach your kids to think about saving for something they’ll need in the future, rather than impulsively buying something they want now. You can even talk about retirement and investment funds, which some students might be interested in contributing to at an early age; especially if they’ve already held down a summer job. Be open about how you’ve personally managed to save up for a car, a house or their college fund, and talk about what sacrifices or financial products helped you achieve your long term goal.
Teach the Value of Value
If there’s one thing your kids should know about personal finance skills before they start college, it’s how to live within their means. Reinforce the value of shopping for value, and remind them that the smallest financial decisions can have the biggest impact – like making coffee at home instead of stopping at Starbucks every day, or scouting out a used textbook instead of purchasing it new. Then, have them come up with their own ideas for being more value-conscious. Who knows – your kids might have a little something to teach you, too!