This is true for all stages, from their first steps to their first bike ride, from their first time driving to their move out of the house into college. Yet the move to college comes with a level of financial freedom that the other stages rarely, if ever, experience, and it’s important to equip your children with the knowledge and tools they need to make the most of their finances once they don’t have their parents to rely on for groceries and other necessities. Here are a few ways to teach them the value of their money, and a few general things kids should know about before leaving the nest for school or work.
1. Credit Cards aren’t free money.
Racking up credit card debt is easy for a fresh face who’s just starting to experience purchasing freedom. It becomes easy for students recently enrolled to overestimate (and underestimate) all that they’ll need to thrive in their new environment, and even easier to end up spending more money on food and fun than they otherwise should. Teaching your children the goals and benefits of credit (improving your credit score, expanding your line of credit) as well as the pitfalls one can encounter when using a credit card (crippling, unexpected debt) is important for ensuring their financial freedom well into the future.
2. Work experience is also finance experience.
The moment a new worker gets their first paycheck is always a particularly special one, in that it teaches them both the value of their labor and just how easy it is to burn through the paycheck and have to wait two weeks to a month for the next one. Providing your children with small examples of hourly efforts and what those efforts translate into can help diminish the shock that comes with realizing just how much their work is worth once they actually find a job. Working through college can also help with this, but making sure your children know how to translate the money they spend into the effort it’ll take to recoup it is an important lesson.
Nobody likes budgeting right away. It’s daunting to try to figure out how you’ll be spending your money on a weekly to monthly basis. But like all good habits, if started early, teaching your future college student how to effectively budget their finances will provide them with a skill that will help them for the rest of their lives. Give them small budgets at first, let them join you in budgeting groceries, and encourage them to start budgeting when away at school and they’ll be finance-savvy in no time.
Giving your child the right skills for managing their money is both important and overlooked in a lot of families sending their children off to college. Being financially responsible is a full-time job, and the more work experience they get in earlier, the better they’ll be at it later in life. Make sure to make your children aware of when it is and when it isn’t appropriate to use credit, give them a bit of work experience to teach them the value of their money, and most importantly of all teach them how to budget themselves and they’ll be on a solid path to financial freedom.