It is that time for a lot of people, the kids graduate high school and most are off to enjoy the college experience. But are they financially ready? Have you taught them enough? This is a question that won’t fully be answered until some time has passed and they have had some experience out in the real world on their own.
Were you ready to leave the family home and make it on your own when you left? Or did your parents financially support you for a year or more until you were able to make it on your own? This isn’t an option for a lot of families today and parents shouldn’t be the unlimited funds manager for their kids.
Learning to be financially responsible is a constant work in progress. I am still learning everyday as new situations are put in my path and I have to figure out how to make it all work. I definitely know more now than I did then and I wish I had been better prepared so that I didn’t have to learn so many things the hard way!
Financial discussions should start young. Kids can benefit from knowing the value of money and begin to explore the difference between wants and needs as they begin to pay for their own toys and candy.
It would be great if this info was taught in school as a mandatory class starting at age 16. This is when most kids get a job to support their car payment and some of their living expenses – you know food, fun and friends. This would be a great time for kids to be introduced to a checking account. They can learn how to track their expenses, make a budget and begin to live within their means. Learning this at a young age gives you and your child a chance to have a dialogue about the financial pressures and flexibility which will give them a better foundation when they have to do it for real with rent, utilities, household expenses, etc.
Using a software program will make the lesson pretty easy as they begin to understand what their money can do for them as they are saving and tracking their income and expenses. Promoting a Savings Mentality at a young age can eliminate some hard lessons later.
As a parent, we are the example for the next generation. We are either a good example or an example of what not to do. Either way there is so much dialogue there. Just be open and honest about financial progress and mistakes so that they can benefit from the lesson and do better.
I would also recommend that your child start building credit at 18 with a credit card. The earlier they start this, the sooner they can buy a car on their own, finance a house, not use you as a cosigner. It isn’t as easy as it used to be to build credit. A lot of companies will not give you an account until you already have one. A secured Visa would be a good introduction to the credit game.
We should all have 6-8 months of living expenses saved as a safety net for a major emergency. Your college bound child is no different. Money in the bank means that they are on the right track and will not be a financial burden to the family. They will thrive out in the real world and carry these values for a lifetime.
So give the kids a chance to do it on their own. Open a checking account, set up the software program, help them to balance their bank statements every month. Discuss their budget with them so that they are paying attention to how much they are saving and where they are overspending. This takes daily practice and a whole lot of patience. However, a financially responsible teenager, will grow into a financially responsible adult who can take care of themselves so that you are not a source of unlimited funds for them. Being financially responsible is empowering and one less thing that you will have to worry about!
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