By the mere act of having children, parents destine themselves to take on a wide variety of roles during their lives. They can be doctors, coaches, guidance counselors, friends, teachers and even chauffeurs, but perhaps there is no more important role than that of financial advisor. The lessons you impart to your children during their high school and college years will stay with them for the rest of their lives, and could very well make the difference between a life of debt and a life of financial security.
As children leave high school and enter their college years, these financial lessons must increase in intensity. When children are home, the parents can watch over them and provide financial advice, but when they are away, they can be tempted by easy credit and luxury buys. Here are four financial lessons to teach your college student that will help him or her make wiser financial choices:
- Your High School Senior/College Freshman: If your children are about to graduate from high school and head out on their own into the college world, it is crucial that you take the time now to teach them about the reality of college costs. Sit down with your child and review what it will cost for him or her to attend college. Discuss the college financial aid that has been awarded, and how much will need to be covered from savings or federal and private student loans. Help your child project income and expenses during college and after graduation, so he or she can start learning now to live within a budget.
- Your College Freshman/Sophomore: The lessons must continue as you help your student review the financial ups and downs of the past year. Discuss the amount of credit that was used versus the amount of income that was available. If your child is already getting into debt, start constructing a plan to get out of it now. Talk about summer jobs, continue to look for college scholarships and put together a budget for the next year based on what has been learned.
- Your College Sophomore/Junior: Keep reviewing financial basics with your student. Talk about the credit card and student loan debt that has been acquired, and try to make projections for anticipated income after graduation. If your student's selected career field won't provide an income that will be able to repay these loans, something might need to change. Your student may need to consider finding additional sources of income, switching majors for a concentration that offers higher income potential, or transferring to a lower cost institution.
- Your College Senior/Graduate: You may think all the hard work is behind you, but some of it is only just beginning. Sit down with your graduate and review all of the student loan debt that has been accumulated. Try to consolidate student loans whenever it makes financial sense.
If necessary, involve the financial aid office at your student's school or financial aid advisors who can help you explain the available options. It may not be easy but it will be worthwhile because these are some of the most important lessons you will ever teach your child. Be a good teacher who gives your child a head start on the financial road to success and, who knows, you may even learn something that will benefit your own financial future along the way!