As the summer season draws to a close and a new academic year looms ahead, it becomes crucial for parents with college-bound children to prioritize financial literacy.
As you may know, financial literacy is a crucial yet often overlooked skill in young individuals. According to the Council for Economic Education, personal finance coursework requirements exist in 21 states at the high school level. Consequently, much of the financial education for today’s college students largely falls upon the shoulders of parents.
While teaching your child basic money management skills may initially seem daunting, it does not have to remain that way. Here are some steps you can take to prepare your college-bound children or grandchildren:
1) Open a Checking Account
A checking account is the first step toward financial independence. It provides college-bound children with access to an automated teller machine and facilitates the payment of bills each month. By connecting your account with that of your child, you can oversee their spending and potentially help them avoid overdraft fees.
2) Consider a Monthly Allowance
In addition to tuition, room, board, and books, your child will incur other miscellaneous expenses, including transportation, clothing, personal items, and entertainment. Establishing a monthly allowance can help manage these costs and instill the value of money in your child.
3) Encourage a Part-Time Job
If your child excels in time management, securing a part-time job while in school can enhance their resume and teach them valuable lessons. Allowing them to use their earnings to attend concerts or purchase the latest merchandise from the school bookstore can also promote financial responsibility.
4) Consider Student Credit Cards
Teaching your child to use a credit card for small purchases and ensuring that they pay off the balance in full each month from their allowance or potential earnings can prove beneficial and assist them in building a credit score. However, it is important to note that credit cards are not suitable for everyone. If your child is not quite ready to have a credit card in their name, you can add them as an authorized user on your own credit card.
Implementing these measures can greatly benefit your children in the years to come. If you have any questions, please reach out. We also encourage you to read our upcoming blog on changes to the FAFSA (Free Application for Federal Student Aid ) form.
Thanks to FMG for the information in this post!