Preparing Your Child for Financial Success in College

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If you blinked and that little baby of yours is suddenly a junior or senior in high school, chances are good that both of you have started giving some thought to whether or not college is in the cards. If it is, there are a wide variety of fun and exciting new experiences right around the corner. Even if college is a year away, now is an appropriate time to start thinking about how your child handles money.

While s/he will most likely still rely on you for a large percentage of any money needed, college will be the first time s/he will have to make independent spending decisions. So, even though it’ll be your money, your child will be using it to form (hopefully) good financial habits that will last a lifetime.

There are many things you can do at this time that will either help or hinder your child when it comes to being financially successful. Here are a few tips:

  • Be ready for mistakes – As with anything our children do, making poor money choices in college is yet another learning experience. As a parent, be prepared to watch (from afar) your child goof up a few times at first. S/he may very well over spend and come crying to you for more money. If this happens, don’t come rushing to the rescue. Let your child feel just a little bit of the struggle that comes from making bad money choices. It is from that struggle that s/he will learn to make the right choice the next time around.

 

  • Put limits on those mistakes – While it is most definitely a good learning experience for college students to (for the most part) handle their own finances, as parents who are funding that experience, you can help them avoid utter disaster. Help your child obtain a low spending limit credit card or a debit card attached to an account that you share with him/her. Sit down with your child and review his or her spending habits periodically to go over any good and/or poor decisions.

 

  • Don’t be too generous – Although your instincts may tell you to load your college student’s bank account with plenty of money so they never have to want for anything, doing so is actually a really bad idea. Faced with open access to a large (to them) sum of money for potentially the first time in their lives can lead to an overwhelming urge to spend too quickly. Learning how to spend modestly is a skill that comes with time. Come up with a plan that will have you depositing spending money into their account more frequently, and in smaller increments. You can increase the amount of time between deposits along with the dollar amount gradually, as your child progresses and shows that s/he can handle more financial responsibility.

It’s also a good idea for your child to take on a very part time job during college, as long as s/he is able to do so without interfering with classes. While s/he will still need financial help from you, having an income of his or her own will further aid in solidifying the overall lesson you want them to learn: Budgeting is a life long skill that is just as important as all of the other information they’ll learn throughout their entire college experience.

 

Image credit: College of DuPage

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