We are nearly halfway through the summer and before you know it, kids will be heading back to school. For parents who are getting ready to send their children off to universities across the country, different preparations are taking place beyond the purchase of school supplies.
Most of these young adults will be living independently for the first time in their lives, which includes managing their own finances. I recently contributed to an article in Family Circle magazine that offers parents advice on, “How to Raise a Financially Responsible College Student.” The article presents some terrific tips on discussing tuition costs with your children and how to help them budget their living expenses.
Our children aren’t given much practical financial education in high school, so the responsibility often falls on us as parents to teach them to be financially-fit adults. It’s important to address broad topics early and transition to more specific topics as children get older and approach adulthood. Begin by talking about how money is made and items are paid for, and move to more specific issues like balancing checkbooks and budgeting for items that are necessities versus wants.
It is also important to remember that as children approach college graduation and are about to enter the workforce, they will face a whole new world of financial responsibility and challenges. Rent, student loan debt and 401(k) options might all be new issues. Your hard work has likely paid off and you raised a financially responsible adult, but helping them learn about consolidating their debt, budgeting for rent and selecting the right investment options in their employer-sponsored retirement plan are still areas where they will look to you for guidance. Please contact your investment adviser if you have any specific questions regarding financial education.