Smart Money Basics for College Students
For many college students, the consequences of their financial decisions may not be completely clear. Learning how to make good decisions—like how to avoid impulse purchases or how to keep from sinking into credit card debt—doesn't always come easily. Your college-age children may still need guidance from you, even if they insist that they pretty much know it all.
Unfortunately, retirement savings and credit scores just don't loom large enough for most young people. However, the sooner they grasp the long-term impact of today's financial decisions, the more likely they'll be to succeed after graduation. Just learning how early investment strategies can lead to greater wealth can be an eye-opening revelation.
We've compiled some tips below to help you start the conversation about saving, spending wisely and planning for the future. Talk to your children today about these basic principles and get them started on the right track.
Show Them the Power of a Budget
Before your student leaves for school, sit down and devise a monthly budget so that you'll both know exactly what to expect. Not only does this strategy help college-age children set personal spending limits; it also helps them decide the most appropriate places to spend their money. After graduation, offer to help your child create a household budget. This will make planning for the basics, like rent, utilities, groceries, and transportation, much easier.
Talk About Credit
Credit is the driving force behind our economy. Establishing a good credit history is important for everyone, including college students. Take time to discuss the credit industry with your children. Explain how personal credit works, as well as the financial decisions that can build or destroy it. You may even want to consider purchasing a prepaid debit card to use as a low-risk teaching tool.
Teach Tax Basics
Even if your children have never filed tax returns before, you can still discuss some basic concepts with them to help demystify the overall process. You can begin by explaining the withholdings that appear on pay stubs. You may also want to involve them in your next tax-filing procedure just so they can see how it all works. When your children are ready to file their own returns, guide them through the process.
We've collected a bevy of helpful suggestions for teaching basic financial concepts to children of every age. Whether your children are just old enough to enter pre-school or are ready to graduate from high school, we have the resources you need to help them establish a strong financial foundation.