Making Cents With Your College-bound Kid
The Financial Conversation You Need to Have with Your Child Before They Leave for College
By Donna Skeels Cygan | 8/1/2014, 1:56 p.m.
Albuquerque, NM - Your years of encouragement and supervision have paid off, and your teenager will be heading off to college this fall. But if you’re like most parents, your pride and relief are mingled with new worries. You want your child to thrive (or at least survive) academically. You hope you’ve made a lasting impression when it comes to teaching time management skills and making “responsible life choices.” But is it possible that you overlooked one of the most important lessons of all: how to manage money?
Now that your student will be living on his or her own for the first time, he or she will be facing a lot of potential financial pitfalls—and you should make time to talk about them.
Often, college students don’t realize that their current financial habits and decisions will impact their lives for years to come—and looking back, many wish they’d done things differently while they were in school. That’s why it’s so important for parents to sit down with their kids before freshman move-in day and have a serious conversation about good financial habits. I promise—underneath the potential sighs and eye-rolls—your child will absorb more than you think.
In addition to owning a successful financial advisory firm, my husband and I have one daughter in college as well as one recent graduate. Much of my advice to my children mirrored the guidance I give my clients, much of which is detailed in The Joy of Financial Security.
One of the book’s central tenets is that lavish, spontaneous spending doesn’t make us happy at all (at least not for long). Sane, smart money management—which should ideally start in college—does bring joy and peace (not to mention smaller credit card bills and student loan payments).
Here are seven things to consider with your student before classes start:
Be sure your child knows what this is costing. (And make her commit to finishing in four years.) There’s a lot of popular “wisdom” for college students along these lines: “Don’t rush. Experiment and try a lot of new things. Take your time figuring out what you want to do. And don’t forget to have fun!” College is a great time to explore new areas of interest…but college is a time to focus on learning and earning a degree.
It’s all too easy for students to sign up for semester after semester of classes that look fun, interesting, or easy, only to find that they’ll need to spend an extra year (or more!) completing graduation requirements.
Involve your student in the financial aid process. Make sure your student is knowledgeable about any financial aid he may be receiving, whether it’s in the form of merit-based scholarships, need-based aid, grants, work-study, or something else. (This is especially important if you, on whose income and assets the aid may be based, filled out the forms!) It’s important for your student to know what he’s entitled to, what his aid does and doesn’t cover, and whether terms and conditions will change from year to year.