College will prepare you for life in many ways, but there are certain skills we all must learn elsewhere. Financial skills are at the top of the list (or should be), but parents often wonder exactly how to teach financial management.
Hopefully, college students will enter their freshman year with the following financial skills in their tool boxes, or will be well on their way to developing them. Parents, here are eight things you should encourage your student to do during their final year of high school, continuing into college, to encourage greater financial independence.
Get a job. Nothing teaches financial management like earning, saving, and spending your own paychecks.
Open checking and savings accounts. Everyone should understand how to manage a bank account by the time they enter college. Luckily, it’s easy to digitize everything these days, since most banks offer apps to help you keep track of your saving and spending habits.
Pay bills. By freshman year, a student should be able to manage two bills (cell phone and car insurance are good ones to start with).
Live within a budget. Those bills, along with expenses such as gas and food, will become your budget. If a student can manage a budget by the time they graduate college, they will be more likely to live on their own and manage expenses such as student loan payments.
Build credit. Parents, you might be aware of how drastically a low credit score can impact a young adult’s life (and how difficult it can be to recover from that low credit score). Now is the time to teach your student how to appropriately manage and utilize credit.
Discuss student loans. While student loans are sometimes necessary, it is important to understand interest rates and repayment terms. Taking the minimum amount of loans necessary to graduate can prevent regret later. Discuss other ways to finance a college education and living expenses.
Become aware of scams. Unfortunately, even worldly adults sometimes fall for a financial scam. Educating yourself on the signs of a con artist, and how to handle suspicious emails and phone calls, is the best way to prevent yourself from becoming a victim.
Research potential future salaries. Before selecting a major and heading down a career path, learn about average salaries for those jobs. An educated decision will prevent unpleasant surprises later.
Parents, you can ensure that your student learns solid financial management skills by encouraging them to tackle the above tasks. Students, remember that learning these skills will lead to greater independence, both now and in the future. “Adulting” isn’t always fun, but freedom and financial stability sure are!