When you prepare your kids to go to college, you may already be concerned about them making the right friends and doing well in class, but there are other things to consider as well. They will be more financially independent, so it’s important to start them out on the right path. This encourages them to make better choices with their money, and it can set them up for success after graduation.
Talk About How Their Degree Will be Funded
Talk about how you plan on paying for school, including tuition, room and board, books, fees, and any other expenses. The conversation could be emotional, but it is best for your kids to know how their bills are paid, especially if they will need to fund anything themselves. If your kids will need to pay back student loans after graduation, they need to know exactly how much that will be.
Families may make agreements about who will pay back loans, but everyone should know who is responsible legally. That’s because multiple people could be affected if there are late or missed payments. It’s common for students to take out federal loans, which are in your student’s name. Your student would be responsible for this debt. Your child can also take out private student loans, which will require income and credit to be reviewed. You may need to cosign on any private loans your child takes out, and this would make you legally responsible for payments if your child is unable to repay them. If you want to help your child go to school without saddling them with too much debt, you can take out a Private Parent loan. Getting low-rate Earnest college loans for parents means your child will have a chance to focus on academics and then earning money after their college years.
Teach Them How to Budget
Even if your child already has a job, they may not have had to budget or live on their own, so it’s important to go over these skills. Talking about budgeting can help them make the right choices about money. Teach them what counts as a want and what counts as a need. When they are living on a tight college budget, they may find they are not able to fulfill every want. Help them understand how much things tend to cost so they have realistic expectations.
Help them build a budget by starting with the money they have coming in. This might include funds from loans, allowances, jobs, or even small businesses. They can then subtract their expenses, like tuition and the costs of living. Make sure to include fixed expenses, like rent, and variables, like groceries and gas. It’s also important to come up with a plan for saving money. Help them create a goal of how much to set aside each month. This could be a percentage of their income, like 10 to 20 percent, or it could be a set dollar amount. Even if there isn’t much to save, they should still start building the habit of saving money they didn’t spend.
Talk to Them About Positive Money Management
Helping your kids keep their spending low can better prepare them to make student loan payments on time once they graduate. Down the line this will help with things like keeping credit card debt at bay or paying on their mortgage as well. Your child should understand when bills are due and know how to reduce their bills. They may allot only a small percentage to discretionary spending like eating out or subscription services.
Help Them Apply for Scholarships
Whether or not your child is going off to college right away, they can still start to help with expenses. Give them some time to research and apply for different scholarships. Encourage them to take this as seriously as a job, as the rewards could be much higher than a minimum wage job. Encourage them to talk with their guidance counselor about applying for national and regional scholarships. Their guidance counselor can give them resources to find potential scholarships, including ones specific to their interests or school.
Your child shouldn’t stop applying for scholarships, even once they are in college. Their academic department might have scholarships available for students who are further along in their degree. Applying for various scholarships can benefit your student in multiple ways. Your child may feel a sense of accomplishment if they are selected for a scholarship. Taking part in interviews or writing essays helps build valuable skills, and it also encourages your child to think about what they want to do in life and articulate this.
