It's no easy task being a parent, and you played a crucial role in helping them earn their diploma.
Financially Preparing Your High School Graduate For College and Beyond
If you are the parent of a recent high school graduate, congratulations! It’s no easy task being a parent, and you played a crucial role in helping them earn their diploma. Sending your high school graduate off to college is a bittersweet experience whether your child’s departure makes you an empty nester or not, as saying goodbye is never easy. In the coming summer months before that moment arrives, however, it’s important to begin financially preparing your child for college in the fall. Understandably so, your child is likely so focused on the big adjustment of going away to college that long-term financial goals are not on their radar, and may not be without your support and guidance. Whether your child attends classes on campus or online, or has decided to take a gap year to avoid possible disruption due to the current pandemic, it’s never too early to start helping him or her understand money management as they begin to experience and establish their financial independence.
If your child worked a part-time job during their high school years, then they already have a bit of experience with earning their own money. If they haven’t, now is a great time to encourage them to apply for a summer job. Whether it’s stocking shelves at a grocery store or bussing tables at a restaurant, they’ll get hands-on experience with practicing their cooperative skills, managing their time and, likely the most exciting for them, earning a paycheck.
After they begin college in the fall, continuing to work part-time may or may not be right for them. While some freshmen prefer to focus their initial efforts on adjusting to living in the dorms, making new friends and navigating campus, others may prefer to find a job in order to keep earning a little pocket money for food, shopping and other activities.
As an adult, you already understand the importance of money management, and while your child likely does also to some extent, helping them further understand both the positive and negative consequences of money management is essential for their future financial success. If they are already 18 years old, help them find and apply for a credit card, and be sure to stress the importance of regularly paying off their balance in full. Many college students (and older adults, too!) view credit cards as extra spending money, instead of a tool to help them build credit that will be vital when it comes time to purchase a car, a house, or, likely in the not-so-distant future for them, rent an apartment. Make sure they understand that they could be paying for (literally) bad financial decisions they make now for years down the road if they aren’t careful with their money.
Teaching them how to budget their earnings is a skill that an alarming number of people have not yet fully mastered. Perhaps the biggest rule to emphasize is: If you don’t know how much money you earn every month and how much you’re spending, you’ll likely end up in debt at some point in time. However, because many college students rarely earn a consistent paycheck, encourage them to set up their budget based on their lowest monthly estimate, rather than an average. If they budget based on their smallest paycheck, they can always go up there and will rarely, if ever, go over budget.
For students attending college, both our Student Checking and Rewards Checking accounts offer a variety of great benefits for those who will be experiencing newfound financial independence this fall, including no monthly service charge, competitive earnings, and free online banking and bill pay. Apply for either account online today, or stop into your local branch to learn more.
Everyone knows that saving money is important, but explaining “why” to your child with reasons that are relevant to them at their current stage in life will resonate more than telling them to “save money for the future.” For them, savings will help with the deposit on their first apartment after they are finished living on campus. Renting an apartment also comes with living expenses they didn’t have in the dorms, like utilities, Wi-Fi, gas (if they own a car), food, entertainment, etc. If they don’t have a car, encouraging them to set aside money every month to save up for one may be a great motivator, especially if they’ll need one to get to and from campus after moving out of the dorms.
Another great motivating factor to help encourage your child to save money is travel. It’s likely that at least one or two of their high school friends moved out of state to attend college. By saving money every month, they’ll be able to afford a trip to visit friends over a long weekend or during spring break.
It goes without saying that you learn more from your mistakes than from your successes. However, this shouldn’t be used as an excuse to blow off financial responsibility and throw all caution to the wind. Instead, it’s important to understand that while your child will inevitably mismanage their money from time to time, especially while in college, these mistakes will teach them what not to do in the future, and ultimately help prepare for them for their college years and beyond.