You may have children that are starting their first year at college away from home. This can be a time for them to experience great growth and life skills, including financial independence. Katy Hopkins, for U.S. News, wrote some useful tips for sending your kids off to school with the right jumpstart to manage their money properly, and gain knowledge about finances that will stick with them throughout their adult lives.
First off, don’t just give your child an infinite supply of money for the entire year and expect them to use it wisely. They are probably not used to large sums of money available at an instant to them, and will have a hard time managing the money to make it last long term, or thinking ahead to future expenses.
Make sure to talk to them about budgeting for the long term and setting up plans that allow for unexpected costs, such as a night out with friends, or gas money. This is also a great time to let them know how much monetary support they can expect from you; such as who will be responsible for the purchase of textbooks and whether you’d like them to begin saving for their last couple of years of tuition.
Embrace the financial slip-ups, but make sure to be firm about what the consequences are when they mismanage, as the mistakes can be learned from now, but will be much harder if they make them when they’re adults. Also, you can encourage them to get a debit card or low limit credit card, so they have back-up in case of an emergency, but go over the statement at the end of the year with them to see what could have been easily avoided.
Financial freedom is also very important to cultivate and encourage in college-aged children. Even if it’s just a small part-time job, it can help increase their productivity and time management skills, two very valuable skills to have later in life. It will help them see the connection between money earned and money spent so they will likely become more effective at budgeting.
Finally, you can always keep tabs on your kid, or help them with budgeting by using sites such as Mint.com or MyMoney.gov. They can use the sites to gain knowledge about finance management and also to set personal goals and budgets for themselves. Some schools may also have virtual financial literacy programs your student can utilize.
Just remember, letting them go off to college doesn’t mean you have to let go completely. Allowing them some room to grow and be on their own is a healthy way to let them gain life skills that will help with problem solving in the future.
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