Reaching financial independence can be a difficult task for anyone, but especially for college students who have had their parents paying for their bills for most of their lives. But it is important for both students and parents to take certain steps throughout college to prepare themselves for the inevitable day when they will be living on their own financially.
One of the most valuable and important steps that parents can take at any time is to start explaining everything that goes along with being financially independent. For example, next time you are doing bills, have your child watch and explain the steps involved, including keeping a record of when and how much money is due for each bill. And there are plenty of other financial subjects that teens don’t give much thought to until they become an adult, like different types of insurance. GradGuard offers many different insurance plans for travel, tuition, renters, and other kinds of insurance for college students at affordable rates. These types of insurance are relevant for students and help to prepare students for when they have to go out into the world and get their own insurance.
Also, it is important for parents to explain how credit works. While most students will claim that they understand credit cards, most college students get credit cards and then rack up massive debts. Unfortunately, while most parents would just keep their kid from getting a credit card forever, it is inevitable and, therefore, better to teach them about it before rather than after they have racked up tons of debt. It’s also important to explain how credit cards can help and hurt your credit score and why that’s important for when they are older and trying to get a car or buy a house.
In addition to this, students can try to educate themselves about what they will be expected to handle in the future. Now is the perfect time to get some practice when you have someone there to help you learn and correct your mistakes. Also, many colleges offer courses on personal finance that take students through everything from getting a bank account to taking out a loan.
Another important step that college students can take is to get a part-time job during the school year or a full-time job during the summer. The benefits to doing this are numerous. Not only can you earn some extra money, but it also looks great on a resume when looking for a job, especially if those jobs you get while in school are internships. And with that extra money you can pay for some of your own things without having to turn to your parents all the time.
In addition to this, parents should try to limit how much money they give freely. While it may seem hard when you know $50 to you is worth a lot less than it is to a college student, it is teaching your child discipline in how much they spend and forcing them to make their own money and budget it, which they will need to know when they go out into the real world. By giving your child money, are you setting your student up with a lifestyle he or she may not be able to maintain on an entry-level salary after graduation?
Parents can also start to transfer over some payments that they cover for their children while they are in college so that it doesn’t seem like one lump sum when the student graduates. For example, if you are paying for their gas and car insurance, make them start paying for their gas, and then when they have a job make them start paying their car insurance. By transferring over bills one at a time it will make the overall load lighter for your student.
There will be times when your child has to come and ask for advice, help, or maybe even money but by using these tips both parents and students can make it a little bit easier to start on the journey to financial independence in college and afterwards.
For more information about preparing college students for the real world and keeping them safe, visit GradGuard.