Three money tips for parents sending their child to college
Congratulations, your child is going to college! You have spent countless hours helping them prep for the SATs, diversify the organizations and activities they are involved in and spent plenty of money on gas driving them around.
Now it’s their time to have a taste of independence and decision making.
Don’t worry, they may think they are independent adults, but they aren’t quite yet. They will still rely on you in some capacity.
How can you help them make the most of their college experience, be financially responsible, AND still keep your sanity?
1. Have a Money Plan
Regardless of how or when your child earned money to take with them to college, having a budget plan or at least talking about a budget is crucial.
Budget Plan 1 – Say your child worked over the summer and saved up a sum of money to spend throughout the year. Take that lump some and divide it by 10 months (the time they are in school), in order to give them a monthly budget amount to maintain.
Budget Plan 2 – Perhaps you will help your child with monthly money for groceries, gas, and spending. Have a designated amount ahead of time that you pre-plan for with your child. Talk to them about the amount and what your expectations are for spending. You don’t want to give them a credit card and say, “Buy what you need.” This won’t help them learn how to budget, which is a vital life skill.
Budget Plan 3 – Maybe your child will work and pay for things on their own. Helping them establish a simple budget beforehand is very important. This plan is the most hands off for the parent, and without a game plan credit card debt can become a crutch they end up leaning on.
The average 2018 college graduate had close to $3,000 in credit card debt on graduation day.
Here is a simple budget template you can use together. Completing the budget together with your child will hopefully help them take ownership, buy in and view it as a partnership rather than another set of rules they have to follow. It will also help you see what their spending priorities are. Do they want a lot to spend on groceries? Miscellaneous? Clothes?
2. Know they will fall short
Know ahead of time that at some point they will fall short or fail. Of course no one wants their child to fail, however a huge part of being an independent adult is failing and learning and growing from our mistakes.
They will probably go over budget at some point or even buy something they will never use. It is better they fail on a budget of $200-a-month, opposed to when real life happens, and they fail with thousands of dollars.
The most important part of your child failing is how you react.
When it comes to finances, if you are helping them financially with college then you should have oversight into their financial choices. An easy way to do this is having a bank account that you both have access to.
Check up on them every couple of weeks to see how they are doing. When they spend more than they have, don’t freak out. Notice I said when! It will happen; however, this is a valuable lesson to learn. If you spend all your money in the first 5 months of school, you either need to get a job or you can’t spend for the next 5 months.
Many times, this is when students turn to credit cards to bail them out. This is why you want visibility into their spending. You can have the discussion before credit card debt becomes “the only choice.”
3. Jobs/Internships in college
There is a common misconception that you should wait until your junior year to get an internship or job, when in reality there are many paid internships you can start as soon as your freshman year.
I personally had three internships throughout my four-year college experience, and one turned into my full time job upon graduation.
I used internships.com to find positions that fit my needs based on pay, hours, location, etc. Some students may have internships they need to find as part of their program, but if they have a chance to get ahead and start building their resume early, why not? Talk to your child to feel this out and see how they are doing with managing college life and if getting a job/internship is something they might be interested in.
Also, on campus jobs typically understand that you are there to learn first and will assign you 5-10 hours a week of work which can be a great way to make a little cash, but not feel overwhelmed balancing work and college. Some on campus jobs could be as simple as sitting at a library circulation desk to check out books/equipment, overseeing a sign-in table or completing simple tasks around the office. This could be a great opportunity to get paid, but then also use the down time to study and complete work.
College is a time to learn. Yes, you learn in the classroom, but it is also a time to learn independence and responsibility. Most of the time this is your child’s first glimpse of independence outside of your house, so allow them to make a decision and live with the outcome of their choices.
|Phil Risher is a Millennial Money Expert that graduated college in 2012. Phil Graduated with $30,000 of student loans and was able to pay them back with in 12 months making $48,000 a year. On his blog, YoungAdultSurvivalGuide.com, Phil shares tips for young people to take control of their finances to create the life they want to live, not the life they have to.|