June 16, 2021 By Brandi Riley
10 Important Money Lessons to Teach Your Child Before They Leave for College
There are many things to guide your child through before they head off to college: helping them sign up for the right classes, ensuring they have everything they need for their dorm room, and helping them navigate their school’s offerings are all at the top of the list.
As much as you may try to cover the expense of everything while they’re still in your home, there are lessons they’ll have to learn on their own. Kids suddenly experience so much freedom when they go off to college and learning how to navigate that freedom is part of the process.
Financial freedom without proper preparation, however, can lead to a lot of problems in the future. Before your child leaves for college, be sure they’re prepared by teaching them some essential money lessons.
1. Don’t use credit unless you have the funds to pay for it when it’s due.
Buying something on credit doesn’t mean it’s free. Teach your child the importance of having a plan to pay back anything they purchase on credit before it’s due. Thirty days might seem like a long time, but that due date comes a lot faster than most people expect.
2. Credit doesn’t have to be bad; building good credit is essential.
Although some parents might discourage their kids from getting a credit card while they’re in college altogether, there is something to be said about building good credit history while in school. Having good credit opens the door to more significant financial opportunities in the future. Make sure your child understands the differences between good and bad credit—and how to build up good credit.
3. Check bank account statements regularly to make sure there are no mistakes.
Encourage your teen to start a regular practice of checking their bank account through their banking app or statements to ensure every transaction is as it should be. Looking at their account at the start of the day will help them stay informed about any changes.
I’ll never forget the time I swiped my debit card at the grocery store, and it didn’t work. After checking my bank statement, I discovered I’d been charged twice for a large purchase. It was then that I made a practice to check my bank account every single day so I wouldn’t have to deal with any surprises.
4. Get another opinion before spending a windfall.
Whether your child gets a refund from their student loan, wins a scholarship, or another windfall, talk to them. It can be tempting for anyone to splurge when they have extra money. Still, depending on the parameters of the funds your child receives, if they don’t spend or save carefully, they might end up in a worse financial situation than they were in before.
5. Just because someone else is going somewhere or buying something doesn’t mean they need to as well.
Every student who attends college has a unique financial situation. As a parent, it’s your responsibility to make sure your child understands your family’s money situation and makes plans based on themselves as an individual. There are many opportunities to spend money in college, but not all of them are reasonable, responsible, or possible. Teach them how to be comfortable with doing their own thing based on their budget.
6. Create financial goals to stay focused.
What position does your child want to be in when college ends? Do they want to travel? Would they like to go to graduate school? Get their first post-graduation job? Talk to your child about creating financial goals for their future and check in with them regularly to make sure they’re still on track.
When I was in college, I knew I wanted to move out of state after graduation. Having this goal helped me to make smart financial decisions with the earnings from my part-time job, and I could move just as I had planned.
7. Take advantage of the offered college amenities.
Most colleges have impressive amenities to offer—everything from gyms and resume workshops to arts and cultural activities. Talk to your child about keeping an eye open for opportunities to not only save money but take advantage of everything their tuition is paying for.
Instead of spending $30 to go out to eat with friends off-campus, encourage your child to attend movie nights at the university theater, or plan to eat their (paid for!) dinner from the school dining hall on the yard for a change of scenery.
8. Savings accounts are meant to be used for emergencies.
A big mistake some parents make is creating financial fear in their children. If your student has a savings account, remind them that the funds should be used if an emergency arises. Maybe they need a new tire because their old one blew out, or they have a big project to finish for a class and need supplies. They don’t have to be afraid to use the money they put away for situations just like this.
On the flip side, buying pizza, splurging on a spring break trip, or treating friends to ice cream are not typically good reasons to dip into savings. Take the time to ensure your child knows the difference.
9. If something seems too good to be true, it probably is.
When most of my generation was in college, companies would give out free swag if you signed up for something. If a company is promising the sun and the moon (for example, a free trip) for signing up, there’s a good chance that it’s not as good of a deal as it sounds. Teaching your child to research and take their time before making a financial decision will be a great lesson they’ll carry for the rest of their life.”
10. Assure your child that they are not alone.
Before you send your child off to school, be sure they know they can trust you to support them. Talk to them about keeping you in the loop from the very beginning of a financial situation. Remind them that they’re still learning, and it’s your job to teach them the lessons they need to know to be financially successful in the future. If they are experiencing financial overwhelm or money troubles, they shouldn’t wait until things worsen before they let you know they need help.
It’s a lot of work to make sure your kid is ready for college. You’re not just preparing them for school—you’re getting them ready for the real world. By taking the time to teach these financial lessons before they get to college and adulting begins, you’ll save them many headaches in the future!
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