College is a profound experience for students, one that teaches them more than just Bio 101 and English Lit. The lessons on independence, both socially and financially, will carry with them throughout their tenure and beyond. Is your student ready to tackle the challenges of making their own money, creating their own budget, and staying fiscally responsible?
As your student ages toward this big milestone, it’s critical that you prepare them with a solid foundational knowledge of how money works and why it’s important to be smart with their money. Here are 5 lessons to instill on them to get them excited and invested in their financial future:
1. Make a Cost List
Sit down with your child and help them create a list of how much everything they use costs. Food, clothing, electricity, cell phones — itemize these consumables over the course of a month to give them a true idea of how much it costs to be financially independent.
2. Create a Budget
Incoming money from paychecks and outgoing money to bills — this is the heartbeat of adulthood. Teach your student how to best manage this equation to understand how much they need to make, how much they can afford to spend, and how much they should save.
3. Emphasize Savings
When teens get their first job, this sudden influx of cash is the time to institute a plan that will help them learn the importance of savings. Most experts recommend 30% be put into savings, but more can’t hurt, especially with the looming costs of books and supplies for college.
4. Keep Yourself Responsible
Ever had your toddler repeat a curse word that accidentally slipped out? Use this “Do as I do” mentality to show your child how important it is to be responsible. Get them involved in saving for a vacation, or have them sit with you while you pay bills. Be their financial role model.
5. Consider a Digital Aid
In this digital era, there are countless tools available to help parents and kids create budgets, track spending on late-night food runs to fuel study sessions, and stay on top of the student loan repayment schedule.
A good step toward financial independence is understanding how savings and loan programs work. At Common Trust Federal Credit Union, our Financial Education Center offers tools and lessons on common banking needs. Also, our Back to School Loan promotion offers students a way to offset the costs associated with going to college with a low interest rate and 12-month payback period. Learn more today!