For many young adults, going to university is one of their first experiences of being independent. It is their first time controlling their finances, from their food, school supplies, and other necessities.
Because of how much there is to think about and how sudden it usually is, many college students come into their freshman year unprepared. Not all are equipped with adequate financial knowledge to comfortably navigate the challenges of being on their own in college.
Parents and guardians are responsible for helping students ease their way into these tasks so that they don’t leave the nest confused. You can positively influence their financial decisions and impart important principles to make sure they are prepared for bigger challenges. Before you know it, they will be looking for the best mortgage rates and canvassing their budget for cars!
Teach Them How to Budget
Since they have lived under your roof for much of their lives, your teen might be unaware of how to use their allowances once they start school. A budget lets them record the inflow and outflow of cash, which helps keep them on the right track.
It is best to set a specific amount you provide for them every week or month once they leave for college. This way, they know how much money they can use for themselves.
Clarify the expenses you are covering on their behalf so that they understand the costs that come with them setting off. For example, you are in charge of tuition fees and board and lodging, but they have to account for their meals, books, and groceries with the allowance you gave.
Saving should also be non-negotiable. Have them set aside an amount from their allowance for savings, as this is a way to invest in their future early. It is even better if they have already started this practice during childhood.
Should they have items they want to purchase, such as the latest gadgets or other luxuries, encourage them to save up for these. This teaches them to appreciate the rewards of using money wisely.
Open a bank account.
A debit card is a great starter for learning self-control. It keeps them from going trigger-happy on spending because they get to see the amount decrease as they use what’s in it.
Take note, however, that since it is possibly the first time they are holding onto a debit card, you will have to teach them how to use ATMs, how their transactions are processed, and how to use debit cards for online banking purchases.
Instruct Them to Think Twice Before Spending
Since you are still financially responsible for them, it can be easy to take this for granted and be careless about finances. Teach them to make smart spending decisions, always thinking things through before deciding to buy anything.
Teach them essential life skills.
A productive way to encourage your child to save is to teach them certain skills to keep their spending at a minimum. One important skill they should have when living in a dorm or their apartment is cooking. Cooking gives them access to meals that are less expensive and healthier than fast food or restaurant alternatives.
This does not mean that they should never go out to eat, of course. But knowing how to cook meals gives them an affordable option that they can seriously consider before choosing the easier but pricier route.
Find creative ways to enjoy college life.
Tell your freshman, too, that college opens up so many opportunities to enjoy themselves that don’t necessarily involve spending money. For instance, many universities have parks and social areas that allow students to hang out with friends. Schools also often hold events that students can attend for free or at a discounted price.
They should take advantage of student discounts to get meals, school supplies, movie tickets, and other items for a cheaper price. Being aware of partner establishments that accept their student ID can mean bigger savings for them.
Bring Them Along for Errands
A practical way to show them how important budgeting and saving are is to have them tag along when you run your errands. Have them accompany you when shopping for groceries and let them observe how you take expenses into account while making sure you have everything you need for the month.
These little activities are not just good bonding. They also help your teens gain a clearer grasp of what it means to be financially responsible.