There are some simple and effective ways that you can help prepare your college-bound children for the financial world.
Set expectations early. Talk with your kids a month or two before school and clarify who will pay for what (i.e., housing, food, tuition, books, etc.). If you plan on giving them an allowance, make arrangements for how the money is going to be sent.
Give them the basics. If they don’t have them already, open up a checking and savings account for your kids. Teach them how to balance their checkbook, and encourage them to do so frequently.
Teach your kids how to budget. Have them document their spending. Encourage your kids to come up with a spending limit for each week. If they can’t stick to it one week, they can make up for it the following week. After about a month, get together with them to add up all sources of income and compare that to the expenses. If the expenses are less than the income, your kids are in good shape. If not, it’s probably time to start talking about ways to cut spending.
Talk about that other type of college credit. While away at college, your kids are going to be inundated with credit card offers, so be upfront about the issue before they get into trouble. If your children will be responsible for their own credit card bills, it is crucial that you emphasize the importance of maintaining good credit. A great alternative to a credit card is a debit card—also known as a check card—which is an ATM card that acts as a credit card but takes money directly from your checking account for each transaction.
If you have already had conversations with your children about finances in the past, they’re probably going to be fine. Going off to college is a difficult change for both of you. But if you talk to your kids about these issues and help them to clearly outline reasonable and responsible financial behavior, you should have less to worry about.