College Bound: Financial Tips for Parents
Congratulations! Your son or daughter was accepted into college and you’re happy they’re on their way to a better and brighter future. One where they can learn to be a responsible adult and make decisions on their own. After all, they’ve done everything right up to this point. But then something happens. You start remembering how you were there for every big moment of their life and how you were there to protect them from anything that may hurt them. What now? They are legally 18 years of age and are free to roam the Earth as they please.
Let me disclose, I don’t have any kids. But let’s face it, we will always need our parents and our parents will always want to be there for us. College was described to me as the midpoint from childhood to adulthood. It’s that point where you’re learning to ride a bike and the training wheels are off but Mom & Dad are still running alongside you to make sure that if you fall, they’re there to help. So, I thought I’d give you parents some tips I wish my parents were aware of to help guide me into the future.
Help them build good spending habits
College kids are always asking their parents for money and parents want to know where the excess of scholarships, student loans, financial aid, and their money is going. Sitting down with your college bound child and creating an account that tracks their spending is a great tool for building good spending habits. This will help you both have your first adult conversation about money and help you gauge how financially savvy your son or daughter is. And make it fun. Take your son or daughter out to lunch and discuss these things. They’ll appreciate the free meal and being talked to like an adult.
Plan for the unexpected
Remember, your kids are now at the age of majority and have a right to privacy; some estate planning will be needed. I know what you’re thinking, “My kid’s only 18 and has nothing to their name, why would they need this?” In the event that something may happen where they cannot make financial or medical decisions on their own, having medical & durable powers of attorney in place can help get you through any obstacles that may get in the way of making decisions for them. After all, this is a point in their lives where they have not met their spouse yet and don’t have enough life experience to make some decisions on their own.
Reward them for their hard work
Many college students have to work odd jobs to make ends meet and have some extra cash for themselves. College graduates nowadays have put off saving for their future, starting a family or buying a home because of student loan debt. If you’re a parent that understands the importance of saving early, then rewarding your child by helping them save early can pay dividends in the grand scheme of their life. A Roth IRA can be a great savings vehicle if your child earns up to $5,500 or more. The more time money is invested, the more likely it has a chance of growing.
MyLife Financial is a fee-only financial advisory firm providing objective and independent advice virtually. Our clients are busy professionals that face daunting questions of how today's financial decisions will affect their long-term financial success. Everything written is strictly for informational use only. Please seek the advice of your CPA, Attorney, or financial professional before implementing any strategies.
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