If you’re the parent of a new high school graduate, you probably have a lot on your mind. That’s understandable. Whether they’re heading for college or launching a career, it’s an exciting time of life, full of big choices and exciting opportunities.
But let’s face it. It’s also a stage of life that can bring its share of problems—money troubles in particular. If you’re worried about how your child will handle their money in college, you’re not alone.
Here’s some encouragement. Your child truly can win with money even when most of their peers aren’t. And they can graduate college as strong budgeters with a clear plan for the future and no debt. Let’s talk about how they do it.
The Big Five
These are the top five money priorities to encourage your child to pursue in college. If they can follow through on these five steps, at least two great things will happen for them at a young age: They will be in a strong position to build wealth throughout their life, and they will gain an awesome amount of self-discipline to help them in their careers.
1. Save a $500 Emergency Fund.
It might not sound like a lot. But $500 is usually enough to see a college student through most of the financial emergencies they’ll face, like a broken phone or computer. Nothing speeds maturity for a young person like experiencing what it’s like to solve a financial problem with their own money instead of using yours or swiping a credit card.
2. Stay Out of Debt.
Going into debt is no way to start adulthood. And no group is as heavily targeted for credit card signups as college students. Tell them to stay away at all costs, and if they already have credit cards, encourage them to cut those up and pay them down.
3. Pay Cash for a Car.
The need for wheels is no excuse to take on a big monthly payment, let alone one that can end up costing you twice the value of the vehicle. Paying cash will save your child a lot of money. They’ll also get a lot more enjoyment from something they actually own.
4. Pay Cash for College.
You’ve probably noticed student loans are getting absolutely crazy in America. Let your child know that paying for tuition and books is no different than paying for food and gas. By paying for college with cash, they’ll immediately be able to use their first post-college paycheck on things they want instead of paying off debt for years.
5. Get (and Stay!) on a Budget.
Even if your child’s income is miniscule while they’re busy hitting the books, that’s no excuse for sloppy spending. Teach your child to write down a simple budget every month so they know where their money is going instead of wondering where it went at the end of the semester!
Your child is going to learn a lot over the next four years, and the choices they make now will either put them in a hole or set them up for success. Help your kids grow into the mature, smart young adults you know they can be by encouraging them to get on a budget, save for purchases and emergencies, and steer clear of debt. Trust us—they’ll thank you later!