As soon as your kids learn to count, their financial literacy lessons should start. But real financial education begins when they are admitted to college.
During college, students have the opportunity to explore the practical financial world.
Unfortunately, most college students focus on entertainment and a carefree lifestyle. They pay little attention to financial discipline.
Parents often ignore the fact that college is a crucial time for young adults to learn healthy money habits.
But they shouldn’t.
It is a parent’s responsibility to teach their kids money management to cope with financial challenges in college. Adopting healthy spending habits early will benefit freshmen as they move forward in life.
Why should your freshman start college on the right financial foot?
Have you ever had the experience of living paycheck to paycheck? Have you ever wondered if you will have enough money to pay your bills? Would you love it if your college-going freshman, too, had to learn the hard way? I bet you wouldn’t!
Your young adult kid may know how to ace a mathematics test, but does he or she know how to budget and stick to it?
How about managing multiple credit cards and paying an electricity bill? As times get more challenging, our young adult kids need to learn financial responsibility and strong financial skills as they grow into adulthood.
It’s time to face the hard truth – once your kid grows up and enters adulthood, that delicately polished piano or violin skills will hold slightly less importance than the ability to manage finances.
The reality is that student debt and storefront payday loans have become a recurrent problem.
3 in 5 people have student loan debts and struggle to repay them.
Some students are also in the vicious payday loan debt cycle. Your freshman runs the risk of becoming one of them without money management lessons.
So how can you help your college-going freshman become money-savvy? Take a look at these 14 tips.
Teach them the value of money
If you want your soon-to-be college kids to set financial goals and manage money, it is essential to teach them the value of money. To know the importance of money, they have to understand the true worth of money.
Explain that money is not free, the supply of money is limited, and they can not spend more than they have.
Explain why is it essential to spend responsibly
Freshmen should learn that spending money all at once is not a healthy habit. They should understand that they can’t spend all their money on payday.
They must understand the difference between things that they want and things that they need. Wants are never-ending and can not be satisfied, and needs should be fulfilled first.
So when allocating their income, they must give priority to needs and then will come wants.
Make them aware of small expenses
A fundamental lesson that a soon-to-be college kid should learn is that small expenses give a significant blow. They may spend wisely on high costs, yet not even care to calculate small purchases such as eating out.
However, when these little expenses add up at the end of the month, they can be the most major expenditure on a budget.
So, they need to understand that their financial success depends on the day-to-day decisions they make.
Ask them to keep track of their finances
As a parent, teach your soon-to-be college kids that simply planning finances will not be enough. They will have to keep track of them, as well.
To achieve this, ask them to use money management tools. Taking out payday loans is not the solution to money needs. They have to manage their pocket money properly to manage all the necessary expenses.
Tell them to set savings goals
Ask your freshman to imagine where they will be in 10 years and what items will be on their wish list. Try to figure out what they want so that they can start saving money accordingly.
This way, they can set aside a portion of their income to achieve their goal.
Teach them to manage debt wisely
It’s important to teach them how to use credit cards properly and the role of debt in their lives. Make your freshman aware of the country’s current financial landscape and to be mindful of the risks they may face if they play with credit cards and storefront payday loans.
Overspending, living beyond their means, and deviating from their budget are not healthy for financial stability. It is also essential to repay credit card bills and payday loan payments in full and on time. Otherwise, they can fall into credit card debt.
Double their payments
It will be beneficial if you can match your college-going child’s payment at least every one or two months.
For example, if your freshman is paying $450 toward their student loan payment, give them another $450 to repay the loan. So, instead of paying $450, they’re paying $900. That’s double the original monthly payment.
Rather than giving money to your young adult kids for holidays and weekend trips, keep that money to support them toward paying off their student loan debt. This way, you can motivate them to repay their debt fast and become debt-free soon.
Ask them to repay bills on time
Show them how you make monthly payments for utilities, credit cards, and other bills. Make them read through the accounts.
Ask them to write the check with you to get a first-hand experience of the proper way payments are made.
Ask the freshman to maintain a budget
As a student, your college-going kid should maintain a budget that allows keeping track of monthly income, expenses, and savings. College students must stick to a very thrifty budget to handle the small amount of money they have in their accounts.
Your freshman needs to understand why it is critical to live within their means and maintain control over their finances.
Tell them to build credit wisely
Since they are just getting started with credit building, students need to monitor their spending. They are in a unique stage of life where every financial decision they make is significant.
Regardless of the temptations they face, they should try to avoid all unnecessary expenditures.
Help your freshman learn about debt payments
It is important to learn about debt payments. Since your freshman is dealing with credit cards and payday loans, they need to learn how to make debt payments.
You can teach them about balance transferring and how to consolidate payday loans. This will help them to repay their obligations on their own.
Tell your freshman to save money
While a lack of income characterizes student life, your college-going child does receive some money, either through working, student loans, or an allowance from you to make ends meet.
Tell your freshman to set aside at least 5-8 percent of the income to build an emergency fund to pay off obligations. Ask them to live a modest lifestyle, eliminating any extra spending.
Motivate your young adult kids to do a part-time job
Your freshman can manage a job while studying. If he is confused about which job he should choose, talk to a career counselor. Remember, a career counselor will provide all the information needed for a job search and prepare your young adult kids for interviews.
Also tell them why it is important to start making money earlier. Help them learn how to make money.
Teach your freshman how to behave professionally
Apart from helping with money management, it’s also important to prepare them for professional life.
Teach them professional behavior skills like the significance of punctuality, how to dress up for an interview, behave in a professional environment, etc. In short, make your young adult kid aware of the nitty-gritty of professional life.
Providing your freshman with the above tools will ensure that they are starting their financial future on the right foot and will set the foundation for financial success that will last a lifetime.
***Author Bio: Catherine Burke is a financial writer for online payday loan consolidation. She provides information on successful cash loans and payday loan consolidation to help people get over a difficult patch. She lives in Kansas and has earned a frame in the matter of payday loans.