Preparing your children for college is a tall order. From stressing the importance of earning good grades, to living a healthy lifestyle, there’s so much to discuss. In today’s post we’re adding another lesson to the list, financial literacy. This is perhaps the single most important lesson you can instill as your child embarks on the ‘real world.’ By discussing, and continuing to discuss, finances with your child you can foster a healthy dialog from which you can both learn. Before your high school senior leaves for school next fall, or on your college student’s next break, be sure and take the following steps to help your child on the road to achieving financial literacy:
Talk Credit Scores
Explaining the importance of having and maintaining healthy credit is a lesson that will help your college student in every stage of life. From avoiding credit card debt while in school to paying student loans after graduation, helping your child understand this early will pay off for years to come. Be sure and explain that high credit scores equate to money savings in terms of lower interest rates. If nothing else, this is sure to serve as motivation for your child to begin building and maintaining healthy credit.
Consider Life Insurance
Life insurance is a topic that many young people prefer to avoid. The thought of mortality is never a fun subject but it’s certainly one that needs to be discussed. Walk them through your life insurance policy. Explain why you chose the coverage you chose and how it could serve as much needed financial support down the road. This is also a time to discuss and consider purchasing life insurance for your child. If you’re planning to back student loans, it’s important to keep in mind that you will be responsible for paying those loans if something should happen to your child. Again this is a tough subject, but a great opportunity to have an open conversation with your son or daughter about real life financial responsibility.
If you would like to learn more about the term life insurance options available for your college student, be sure and read our recent post on the subject.
If this is your child’s first time living on their own, creating and sticking to a budget is an extremely important objective. Not only will it reduce their likelihood to rack up credit card debt, but it will set them up for success. Help them outline a budget that accounts for monthly living expenses, school supplies and extracurriculars. With a little planning, you can make a little money go a long way!
Keep the Conversation Going
Finally, after you’ve walked your college student through Financial Literacy 101, it’s up to you to keep the conversation alive. Ask them about their budget from time to time. Are they sticking to it? Are they having trouble? What about their credit? Are they paying their balance off from month to month? In doing so you will not only keep the conversation going but you will ensure that your child feels comfortable coming to you with questions regarding their finances.
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