Kids going off to college this fall will learn a lot of important life lessons during their stay. How to take care of themselves, how to manage their own time, how to meet new people—they’ll learn to do all these things and more. But perhaps the most important life lesson they’ll learn while in college is how to handle money. And I’m not just talking about shopping habits or how to create a budget. No, college is the first real chance for many young adults to get a grasp on some of the most vital parts of finance. It’s ground zero for lessons in spending, earning, and saving money, and the experience isn’t always pretty.
But as a parent, there’s a lot you can do to prepare your son or daughter for the moment when they’re somewhat financially independent in college. The financial lessons you teach your kids before they make that big step into the next phase of their life might be some of the most important ones. Here are a few lessons my parents taught me before I went off to college, lessons that I still refer back to today.
The value of a dollar
If there’s anything that my parents taught me, it’s that money has real value. That might seem like an obvious point, but when you’re a kid it’s hard to understand just how powerful money is in our lives. My mother especially taught me to respect even the smallest amounts of money, from the few nickels and dimes that I found in my pockets to the small pile of ones that I had saved from doing chores around the house. I was made to understand that I should take every purchase seriously, even if I was just buying a pack of gum for less than a dollar. In fact, it’s those small purchases that I was told to take the most seriously, just because they add up so quickly over time if you don’t pay attention.
This is an important lesson for your kids to learn before they go to college: if they can learn to treat their smallest purchases seriously, then you can rest assured that they’ll think carefully before they spend a ton of money on any one thing.
Be wary of credit cards
Credit cards tempt nearly every college student at some point or another. The credit card is such a useful tool for people who know how to use it responsibility, it’s a pity that so many people (wrongly) see it as a way to spend free money. If anything, a credit card can help a college student by acting as a safety net should they encounter some crisis where they have to spend a huge sum of money all at once (fixing a car, a visit to the emergency room, or some other disaster). College students who use credit cards on a regular basis run the risk of racking up a huge amount of debt, and that’s a nightmare scenario for any parent.
I recommend sharing a credit card with your child while they’re in high school. If they can prove that they can use the credit card responsibly during that trial period, then they might be able to handle it on their own when they go to college. If the credit card proves too much for them, then you’ll know they should avoid using it in college.
Saving money at an early age
Saving money is a financial skill that we could all stand to improve upon. The sooner your kids understand the value of saving their money, the more money they can save in the long run. The lesson can be as easy as storing a percentage of their allowance, all that matters is that your kids understand why you’re helping them save money. It’s a great lessons to learn early on if just to prevent your kids from spending all the money they have in their pocket at any one time.
Teaching your kids about savings can also help them if they’re in a financial crunch during school. A college student with a nice financial nest egg in savings is much better off than a student with a credit card in the event of an emergency. While both will be covered in the case of a crisis, the college student with savings won’t have to worry about any debts!
What are some financial lessons you taught your kids before they grew up and went to college?
Nadia Jones is a full-time education blogger based in Houston, Texas. Interested in all things academia, Nadia seeks to be an online college guide for those interested in the realm of online education. For questions and comments reach her at firstname.lastname@example.org.