A big part of growing up is learning to be financially responsible. Most students still rely on their parents financially while in college, but they’ll likely be faced with many opportunities to make their own financial decisions, that could impact them for years to come. Be sure they’re leaving the nest with a solid foundation in basic money management skills so they don’t rack up unnecessary student loan or credit card debt. Read on for our list of financial topics to discuss with your student, if you haven’t already.
Knowing the difference between need and want.
Likely a conversation you had with your student in elementary, but a good reminder. Needs include things like rent, groceries and tuition but not things like a new, high-priced pair of sunglasses and the expansive cable package. Students will be surrounded with a variety of other kids, some who may have the latest gadget or add to their wardrobe weekly. It’s hard for students to remember the necessities need to come first and even if there’s cash left over, putting that towards student loan payments is a much more responsible (albeit less fun) choice.
Living within their means.
It’s not uncommon for students use their new-found freedom to live above their means. New things, spring break trips, great restaurants and a daily coffee are tempting for even the most-fiscally responsible. Racking up credit card bills to support a student’s spending habits is a disastrous cycle that can easily get out of control. If there’s not money in the bank to cover the expense, the purchase shouldn’t get made. Occasional treats are necessary, but making good financial decisions in college will pay dividends down the road.
Create a budget.
Work with your student to create a budget they can live with. It should be realistic in terms of an accurate estimate of monthly expenses along with a little fun money. Allowing fun nights out with friends will make it easier to stick to a budget. Teach them to hold themselves accountable by regularly comparing their budget against actual spend.
Saving up for later.
One healthy habit that all financially responsible people (not just students) practice is saving. Whether your student is getting some money from you or working to earn their own income, they shouldn’t spend everything as soon as they get it. A monthly savings goal should be part of their budget referenced above. Even just $20 a month gets them mentally moving in the right direction. Saving and investing will help your student get a leg up on their finances in the future.
Learning to be financially responsible might take some time for your student. They’ll likely need your guidance and encouragement. Impressed with their choices? Reward them by buying their books, taking them out to eat, or something else they’d love to have. Regardless of how old you are, it’s still nice to have your parents splurge on you once in awhile.