They're off to college! You've spent years getting them ready for this moment. Saving for tuition. Making sure they did their homework. Sharpening their pencils when they took the SATs.
Did you talk to them about money?
Many parents forget to talk about the importance of money along with those other 'adult' topics to discuss.
Why?
Because they assume that money for tuition, room and board, that new computer and iPhone, along with sheets, towels, and the jeans they bought them will get them through their college years. Wrong-o.
My friend's daughter was in the dorm, had a meal plan, didn't have a car, didn't go on any trips or had any unusual expenses, but still managed to spend over $700/month on "incidentals." What? How? Coffee at the local shop. Drinks at the Brewery. Gifts for friends. Late-night pizza. UBER rides. Leather boots that everyone else was wearing. She was living the life she always imagined without the income to support it.
If your darling had trouble with money before college, you can assume that they will have it 10x worse at college.
The first thing to tell your teen: make a budget. Second thing: get a job to pay for your own "incidentals" because that gravy train has left the station. Third: Watch out for credit card sharks that feed on naive college students. If you want your kid to have one credit card for emergencies, that's fine. Just make sure the limit is around $500.
Most important: talk to them about money, what they should be spending, what they need to save money for, and how hard it is to get out of credit card debt along with tuition debt.
Speaking of tuition debt, according to the Credit.com, the average cumulative student debt balance in 2019 was $31,172 for graduates of public four-year schools. With interest, that's over 10 years of payments at over $250/month.
So, congratulations on getting your child off to this new adventure. Now, sit down and talk to them about money.
For more money ideas, contact Stevie@swainconsultingllc.com.