Financial Tips for Kids Leaving Home
By Joan Honeycutt, Vice President, Onarga Facility
Summer is nearly over and the time has come for some of you to send your kids to college – either for the first time or back again for another year. You’ve done so much to get ready. Buy housewares like sheets and towels. Get the car tuned up for those taking a car to school with them. Confirm living arrangements and course schedules. But have you done anything to help prepare your kids for the extra measure of financial freedom that they will experience in college? Here are some common-sense principles that you can share with your kids.
1. Beware of Debt
Getting into debt is so easy…and getting out is so difficult! When your kids are on their own, they might encounter the new opportunity to get a credit card. College students are a prime target for credit card companies. Yet often they don’t have the experience to realize how tempting it is to rack up purchases on their card without thinking about how to pay for them. Discouraging credit cards in your young student is usually the smartest bet. When you think they are ready, it is good to provide accountability as they get started.
2. Make Your Money Last the Month
Another similar temptation that students encounter is spending money too quickly without thought of upcoming expenses. Help your kids to think through what money will be coming in and what expenses are expected. Otherwise, you might get a panicked request to send money soon!
3. Spent Today, Gone Tomorrow
As young people mature into adults, they begin to learn the lesson that their decisions today will affect the choices available to them tomorrow. This pertains to many areas of life, including money. Talk with your student about how the money they spend today will not be available to spend on things they might need or want in the future.
4. What’s Important to You?
How you spend your money reflects what is important to you. This is a great lesson that kids going away to college can begin to learn. Work with them to think through their values and how those values will influence the spending and saving decisions that they will make.
As you can see, kids have the same problems when it comes to money that the rest of us do. They won’t be perfect in handling money so don’t expect that. But you can help them think through their financial goals and priorities and how their decisions today can have a long-term effect. Federated Bank offers products that allow you to make this transition more gradually. For example, our new CardValet service allows you to monitor spending in an account jointly-held with your student. With CardValet you can oversee all transactions, control how much money is deposited, and even set limitations on spending by geography or spending amount. In addition, our mobile banking app makes it easy for kids to stay financially connected even when they’re away from home. Come in and talk with us about how we can help you as you help your kids.
