What You Should Teach Kids About Money Before They Go To College
It hasn’t even been a month, and already some of my clients with college-aged children say they’re getting calls from their kids, who are desperately asking for more money. Seems their “adult” children have spent their money for the semester.
I can’t believe it, but when I think about it, it’s true, no one taught me about money when I went college. Parents, aunts, uncles or people who have friends with kids, a word of warning: it’s best not to wait to start teaching money matters and the ABC’s of budgeting money. Here are some ideas to help raise a financially savvy student:
NEED VERSUS A WANT – It sounds simple, but if you don’t teach a child the difference between a need, like buying groceries, and a want, like buying a video game, they’ll always choose the fun stuff first. Teach them early why you make the purchases you make.
GIVE THEM AN ALLOWANCE – Once your child is old enough to count money, give them an allowance. I wouldn’t give them money for family chores that are expected of most children, like making their bed or picking up dishes after a meal, but you could pay them for things like washing the car or cutting the grass. Make sure part of this allowance money is saved (we’ll talk about that below).
LEARN TO BUDGET – Teach your child the importance of budgeting and not going beyond their means. If you have a big purchase to make or are going on vacation, show your children how you check various websites first to comparison shop for items like airfare or hotels. You could also make a list of food you need for the week, and compare grocery prices in the weekly flier.
OPEN A SAVINGS ACCOUNT – Teach your child how to save at an early age. Open a bank account in their name, then make sure they save 10% of whatever money they receive in allowance or from birthday and holiday gifts. This will also teach them how to save the money they earn for a higher ticket item they really want to purchase.
PRACTICE WHAT YOU PREACH – They say the apple doesn’t fall far from the tree and that’s true when it comes to money. If your children watch you rack up debt on credit cards, they’re more likely to do the same. Spend smart and save.
COLLEGE STUDENT DEBIT CARD vs. CREDIT CARD – Credit card companies aren’t allowed to market to students on campus anymore, but they can solicit students through the mail. Talk to your teen or young adult about the implications of a credit card. If your child is not skilled in managing their money, you may want to consider getting them a debit card instead. Debit cards don’t allow you to overspend. Many have overdraft protection or won’t pay out if your balance is low. Account holders can also set up text message or email alerts to warn them when their balance is running low.
I’ve always been pretty frugal. I learned this from my hard working and working class parents. I’m now trying to teach my daughter, Katelyn, the value of a buck by telling her she’s going to work for DM Accounting starting at age 10 answering phone and filing over the summer. She says she’s ready! As for my clients, some wired their broke child money, but others took my advice and set up a debit card account in their kid’s name.
Here’s to a fiscally sound future for our generation and the ones to come!
