Sending off your kid to college comes with tons of things to worry about. One aspect that most parents are concerned about is finance. Some feel obligated to provide complete financial support for their kids in college, while others opt to cut the financial cord slowly to prepare them for adulthood. No matter what your approach is, it’s imperative to focus on teaching them financial responsibility.
Being financially responsible is the foundation of your kid’s financial success. College isn’t just emotionally and physically taxing. There are plenty of personal and school-related expenses that can direct your young adult to the wrong financial path. To help you in guiding your son or daughter with their finances, we’ve listed a few tips that you can follow.
1. Create a budget together
Creating a budget may sound easy. The reality is, many teens and even adults still find it challenging to build and stick to one. Sit down with your young adult and discuss college expenses. These may include books, living space, laundry, food, entertainment, travel, and so on. Be honest on what expenses you can support them on and which ones need to be cut.
If they’re planning to get a job while in college, consider their potential income too. Teach them how to properly track their money weekly or monthly, and avoid eating out if possible. Also, go into detail about their expenses and the income to create a more specific budget.
2. Guide them in their credit
Building credit is always a struggle, which you can help your college student with. Instead of impulsively providing or tolerating your young adult with a credit card, consider giving them a debit card. This can help them save on budget and minimize the times of spending money that they don’t have. Don’t forget to remind them about what categories you’ll cover and which ones are theirs. Nonetheless, whether it’s a credit card or debit card, prevent yourself from co-signing one.
They can get one if they can prove their earning. It’s better to wait for that. After all, they’re more likely to be careful in using their cards if they know it is their hard-earned money that’s in there. Give specific guidelines for using their cards to have a better grasp of establishing their credit history.
3. Seek help from financial experts
People rarely consider consulting a financial expert when making money moves, whether in savings or investments. As a result, the chances of making spending, savings, or investments mistakes are also more serious. The truth is, there’s a limit as to what you can teach to your college student. If you want your young adult to be more financially prepared, it’s best to find an advisor who can help your young adult with realistic goals and planning.
They can provide proven strategies when planning for investments, savings, and retirement. As a parent, you can also take advantage of their expertise and know how you can financially support your child in college. If you’re an entrepreneur or business owner yourself, seeking professional investment advisory from these experts can help grow your finances more. After all, college isn’t cheap.
4. Talk about the free money
As you know, supporting a college student is not easy on the pockets. To cut off some expenses, take advantage of free education money for students. Depending on your child’s qualifications, the university, or your financial situation, they can be eligible for grants, scholarships, tax breaks, and refunds. High school isn’t the only one that offers plenty of scholarship opportunities. Have your freshman consult his or her financial aid officer or academic advisor to confirm if there are any educational programs they can apply for.
If you and your incoming freshman are explicitly looking for a scholarship, take note that the process can be daunting. Plus, you need to check if your child is qualified for it too. Help them create their application for the scholarship. As for you, you can search for tax credits and deductions for student loans, tuition fees, study equipment, and course materials. Most higher education tax credits will cover the enrollment fees, tuition, and school materials, but not personal living expenses such as transportation and room and board. In addition, some credits come with income limits, so keep that in mind.
Teaching teens or young adults can be a challenge as most of them have their own personal and financial goals to achieve. While it’s not good to interfere with those goals, you should ensure that your college student knows how to manage their money properly. Use this guide to help you get started.