It isn’t always easy speaking to your kids about finances, but it is always necessary. When discussing the real costs of college, there are some key topics which must be covered.
Be sure to calculate the total costs of college by creating a budget sheet. The sheet should include the following semester calculations:
- Rent or Room/Board
- Books and Class Materials
- Cell Phone
- Eating Out/Coffee and Snacks
- Clothing and Accessories
Discuss contribution expectations
Now that you have a good estimate of how much the student will be spending during per semester, subtract all financial aid, grants, scholarships, and family contributions from the total. What you’re left with is everything the student is responsible for during the semester. Make it clear how much you expect the student to contribute to this total, whether it’s from summer savings or a part time job. While the total may seem overwhelming, discussing exactly how the student can pay off their portion, as this may ease some of the burden. A family payment plan might be useful, allowing the student to pay off his/her portion in smaller amounts on a regular basis.
Learn to Save
Students with new found freedom may find it hard to save their money, especially in an urban setting. Make sure your student has access to a savings account with which he/she can regularly add money. Set up a plan to save about 20% of the student’s earnings, and stress the importance of balancing a checkbook to avoid costly overdraft fees or unexpected balances.
Support your student by making sure they understand you are there if they have any problems or questions. You’re probably more experienced with this type of thing than they are, and any advice you can give will be useful. Just remember: saving and budgeting correctly is a learned process, and you can expect the student to make some mistakes throughout the first year – be patient!
Talking to your college-bound kids about finances: Why it’s important
Higher education is a huge investment for both you and your college-bound child, and there is no better time to begin teaching your child about managing his or her finances than before it’s time to start school. With all the freedom of choice that comes with living away from home, there is added financial responsibility. It’s crucial that you provide your high school grad with the tools to manage his/her own personal finances.
According to JumpStart Coalition, a financial literacy group, 87% of college students and 90% of high school students said that they rely on their parents for guidance. Yet, only 26% of 13 to 21-year-olds have had conversations with their parents about wise money management. In relation, many high school graduates lack the skills necessary to manage their personal finances – even basic ones like balancing a check book.
To add to the confusion, college students are often bombarded with credit card offers, many with very high APR rates. It’s not difficult to see how a college freshman, with a credit card in hand, can get buried in debt. All in all, it can be a very overwhelming experience, and teaching your children money management skills will help them to become financially savvy adults.