When sending your kids off to college, how you’ll pay for tuition is the first major financial decision but not the last. Most students will have limited experience managing their own finances, so it’s extra-important that they have the tools and understanding they need. Here are a few things you can do to ensure your kids are financially prepared for their first semester of college.
Talk to your kids about money early on
It’s important to have regular conversations with your kids about money. Discuss saving and thoughtful spending. It can start with simple conversations around allowances, part-time jobs, and gifts from family members. Over time, you can introduce them to concepts like budgeting and investing. These conversations will help financially prepare them for the future.
Help them to set up a budget
One of the best ways to help your kids be financially prepared for college is to help them set up a simple budget. Sit down with them and go over their income—whether they’re taking a part-time campus job, getting an allowance from home, or otherwise—and expenses. Help them figure out how much they can realistically spend each month. Showing them the numbers can help them to stay on track once they start college. They may tweak the budget to better suit their needs once they’re settled in, but having a draft to work with helps a lot.
Encourage them to get a part-time job
If your kid can balance it with the workload, encourage them to get a part-time job while they’re in college. The college might even match this with a work-study opportunity. Having a job will help them to cover some of their expenses and it will also give them some work experience. Working a few hours a week can also teach them time management skills.
Help them to understand student loans
If your child is taking out student loans, they should understand how they work. As a parent you can help them to understand the interest rates and repayment terms. Show them what a repayment plan looks like so know what to expect after graduation. Some students may not be opting for federal student loans, as their families may be paying for college using savings or, through some other means like utilizing the cash value of a permanent life insurance policy. This can also be an opportunity to teach them more about savings, investing, or life insurance.
Teach them about credit cards
If your kids are going to use credit cards while they’re in college, it’s important they learn how to use them responsibly. Discuss paying off the balance in full each month and avoiding high interest rates by using a low-interest card. Many students start college with secured credit cards or student credit cards–these can be a great way to build credit and learn responsible spending habits.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
Source: iQuanti
