You did it! You made it through sleep training, temper tantrums, awkward middle school years, teenage angst, and finally, high school graduation. You’ve taught, disciplined, and cared for your child for many years. Nice work!
As exciting as this time is, your time, attention, and resources are not off the hook quite yet. It’s now time to propel your baby bird from the nest and help them get financially ready for this next stage of life: college!
Before they head off in the fall, society would tell you that this should be the summer when they travel in total abandonment, spend time with their friends, and sleep until 11 am.
But as your friendly neighborhood financial advisors, we think there’s a better use of their time. The summer between your child’s high school graduation and the first year of college is the perfect time to build financial skills and instill healthy money habits.
3 Things to Do This Summer to Help Your Grad Get Financially Ready
Teaching your kids about money will help ensure they are ready to handle the financial responsibilities that come with college life (and beyond!). To get them ready for this new level of maturity, take these three actions this summer:
- Give Them a “Money Management 101” Course
- Discuss College Funding
- Encourage Them to Work
1. Give Them a “Money Management 101” Course
Plan to give your child their first “101” course in money management. (It can even be poolside!) Here’s a possible curriculum outline for you:
- Budgeting 101. Help your child find a free budgeting app that they like and encourage them to use it. They can track their food, leisure activities, clothing, and even school expenses. They can also track any income they receive from paid work, gifts, or stipends from Mom and Dad.
- Saving 101. Encourage your child to think beyond their immediate desires. Do they have lofty spring break plans? Plan to buy a car soon? Have enough money to put a security deposit down on an apartment?
Whatever their desires are, they’ll need to be saved for! Remind them to put a sinking fund category into their budget.
- Investing 101. It’s never too early to start investing. If they don’t know about it already, reveal to your child the beauty of compound interest and how even a small deposit each paycheck can grow and help them achieve their financial goals.
- Credit 101. Tread lightly here because credit cards can be severely misused and cause financial pitfalls. But if you and your child feel like they are financially responsible enough to handle a credit card, apply for one (and make sure it has great reward perks!).
Your student will need a strong credit score to apply for future apartments, mortgages, car loans, etc. If they are not ready for a credit card, you can add them as an authorized user to your cards and they can piggyback off of your good credit while they build their own.
2. Discuss College Funding
There are numerous ways to pay for college and you’ve hopefully already discussed who exactly is going to pay the bills coming down the pike. Use this summer to discuss college student loans and financial aid opportunities.
- College student loans. If your family has chosen to take out student loans, ensure both you and your child understand the amount, interest rates, and repayment plan. Some parents choose to completely pay for their child’s education, some choose to subsidize a portion, and others don’t offer any financial assistance.
You need to decide what you can comfortably afford and communicate clearly with your child about who is going to be responsible for what.
- Financial aid for college. The first step when considering financial aid is to fill out the Free Application for Federal Student Aid (FAFSA). Check out information on the college deadline, state deadline, and federal deadline. Research other scholarship and grant options. A guidance counselor can often help direct you to unique opportunities.
In addition to the ways to pay for college, talk to your child about taking responsibility for their education. Encourage them to show up for class, schedule proper study time, make connections, leave a good impression, and network. Otherwise, it’s going to be four or more years of really expensive social time.
3. Encourage Them to Work
Encourage your child to help pay for their college expenses (including the late-night Uber Eats pizzas) by picking up a part-time job.
A college part-time job should be flexible and close to where your child is living/studying so they can walk, bike, or ride the bus. Bonus if it’s a job where they could pick up extra hours during winter and summer breaks and a further bonus would be if it’s work related to their major.
There are many on-campus job options such as being a residential assistant, teaching or research assistant, tour guide, fitness instructor, cashier, tutor, barista, and more! Venturing off campus can provide even more opportunities such as working at a local restaurant, bank, hotel, or retail store.
And since it’s 2023, there are even numerous flexible, online opportunities! Freelance writing, social media management, and virtual assistant jobs can be the perfect fit for busy students.
Working during college gives your child a practical way to contribute to their expenses and the opportunity to start investing. Even if it’s $25 to $50 per paycheck, investing in low-cost mutual funds will allow your student to see the impacts of investing and create a long-term habit.
Spend some time this summer helping them create their resume, compile references, and apply for the perfect part-time job!
4. Bonus: Love and Support Them!
Heading to college is an incredibly special and unique time. While setting them up for future financial success, we encourage you to also have a blast with them this summer.
Your child is becoming an adult and your relationship will slowly be transforming. They’re probably going to make mistakes—as we all do—and that’s okay. Ensure you’re a safe place for them to come to for advice and help.
You might just be surprised at how well they thrive and excel in their new life and responsibilities.
Get Financially Ready with Five Pine Wealth Management
As customer-centric fiduciaries, the team here at Five Pine Wealth is the perfect match for families just like yours. We know what it’s like to balance a career and family while also responsibly planning for the future.
Launching your children from your home is a major undertaking and we’d love to help you and your family figure out what it specifically means for your finances.
To get started today, email us at firstname.lastname@example.org. We can’t wait to meet you!