By Linda Matthew, AFC
Parents, you have 9 months until your children leave for college! (let’s assume for now that by next September they will indeed be leaving . . . ) During the next several months, do take some time to help them get ready to manage their money in the real world.
This may not be the most comfortable topic — therapists say that talking about money can be more difficult than talking about sex — but do it anyway. Most students today graduate with large loans: the average loan balance was $29,200 (Note 1). This means an average payment of $393 per month in every month after they graduate. In addition, over a third of students in college say that they already have credit card debt of over $1,000 (Note 2).
So take time to prepare them, and see if you can minimize their debt.
- Help them put together a draft budget. Tuition, room, board and book costs are often well understood. But what will they need for living expenses? Together, write a list of your best guess at the items and their costs each month, and total it up. Decide how much you can give them and help them figure out how to earn the rest. Or help them figure out what they can live without.
- Consider the car. With the cost of insurance, gas, maintenance, and parking (and tickets!), this can add up. If they can manage without one, skip the cost.
- Teach them how to cook and how to do their laundry so they don’t have to nervous about these tasks. Send them grocery shopping (on their own, with your card) to help gets the kinks out of that process. Even in a dorm room, you can fix a surprising amount with a mini-fridge and microwave.
- Teach them to review their bank statement at the end the each month to see where their money went. They can even download their transactions and total them up by category — it can be surprising to see the numbers. (Those little rental scooters. They add up.)
- Teach them how to save. This is a journey all its own. Have them work at least next summer, and have them save at least half of what they earn.
Children get most their information on managing money from their parents. But most parents, when asked if they talk to their students about managing money, say no. Take this time to give this gift to your children. Whether we know it or not, our children are learning from us.
Feel free to contact me if you have questions or need help. Start with the “College” chapter of my book, Teach Your Children About Money. I wrote it just for this purpose.
About Linda Matthew . . .
Linda Matthew is today’s guest author. She is an Accredited Financial Counselor® and owner of MoneyMindful Personal Financial Coaching through which she has clients throughout North America. Linda is also the parent of both a college graduate and current college student.
Linda’s new book, Teach Your Children About Money, offers a variety of age-appropriate ways help your children learn about themselves how to manage their money. Go to the MoneyMindful website to learn more about Linda and arrange a free consultation.