It’s been an exciting few months celebrating your child’s senior year at high school and watching them graduate.
You’ve committed to making this summer extra special before they head off to college.
As you make plans, include conversations about how to handle financial decisions.
I know it’s not exciting or what you had in mind. But believe me, the conversation is easier now before there’s a crisis.
Setting their expectations now about money is preventative.
Your conversation may be better heard if you have several small talks instead of one long, drawn-out session.
Before engaging in any conversation with your child, make sure you and your spouse are on the same page.
The last thing you need as you begin to enjoy being an empty nester is your child playing you against your spouse.
Here are four topics to cover this summer with your soon-to-be college student.
1- Financial Aid/Scholarship:
If paying for your child’s college depends on receiving money from financial aid or a scholarship, then review the terms of the agreement with your child.
Encourage your child to schedule alerts on their smartphone if there are deadlines for submitting information,
If you both review this information now, it will help prevent any oversight that may cause penalty fees or revocation.
2- Plastic (Debit and Credit Cards):
Using a debit card or credit card is very easy, especially if linked to a smartphone or watch.
However, with this convenience, it’s easy to forget to check your balance.
Help your child understand how to view their purchase history and current balance. While it may seem common sense to you, it may not be for your child.
Encourage them to check this information frequently for fraud.
Remind them that a credit card offers protection if there is a dispute (whereas a debit card does not have this benefit).
However, a credit card will accumulate fees when payments are late.
3- Spending:
Being away from home and in college is an exciting time. It’ll give your child time to learn more about themselves.
It’s also a time when they begin learning how to manage their finances.
Help them by developing a spending plan (aka budget).
Keep it simple with these eight categories:
Housing (rent, utilities, household supplies)
Transportation (parking, fuel, maintenance, Uber/Lyft, public transit)
Food (groceries, dining out, delivery)
School-related (books, school supplies, laptop, tech accessories)
Personal care (haircuts, grooming products, clothing, laundry, dry cleaning)
Entertainment (movies, concerts, Greek life, getaways)
Health-related (copays, expenses not covered by insurance, fitness, spa, mental health)
Gifts (birthdays, holidays, charity)
If they have a pet, add those expenses as a spending category.
Your child will need to budget for pet food, vet bills, toys, pet sitters, and other expenses their pet generates.
Helping them develop a spending plan will allow you the opportunity to share your advice and set parameters on what you are willing to pay for while they’re attending college.
4- Security
Having a smartphone is very convenient for managing finances. Your child can easily access their bank account and pay for items.
With this easy access, it becomes a target for thieves.
Discuss with your child how to protect information on their smartphone. Talk about what to do if it is stolen.
Encourage them to safeguard their passwords. Also, address security for their debit card, credit card, and laptop.
Transitioning to life at college will be exciting for your child.
At times, it may be overwhelming for them, especially if they will be attending college out of state.
You can help ease the burden by having conversations about how to handle financial decisions.
These conversations will help establish awareness of money while building their confidence for a financially successful life post-college.
(Update to original post from June 12, 2018)
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA®, RICP®, is a Managing Director at Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing comprehensive financial plans, divorce financial reviews, and retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”