The first year of college is the first time many kids have been responsible for managing money on their own. If you're getting ready to send your child off to college for the first time, it's important to help them get financially prepared to handle life on their own, away from Mom and Dad. But according to one study, only 18% of college students say their parents taught them money management skills. So what are some keys to help parents help their kids get ready for the financial side of college?
There are five basic steps. First, make your expectations crystal clear. If you plan to provide your college student with some spending money, take time to discuss how much you're willing to provide, how often, and what the money is for. Second, sit down with your child and create a monthly or even a weekly budget. Help your child understand all the expenses that a budget needs to cover, including supplies, food, transportation and, yes, concerts!
Third, use tech tools. Even better, input your student's budget into an online tool. Many of these apps will securely link to a checking account to make it even easier to keep track of spending. Fourth, a part-time job on or off campus may also be a good idea and encourage financial freedom. Even working just 10 hours a week can help students develop responsibility, schedule their time better, and make some extra spending money of their own.
And finally, allow for mistakes. The best way for your kids to become better money managers is to learn from their mistakes, even if that means they have to eat ramen for a few days. In the long run, it will help them learn how to live within a budget.
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