Blog | 5 P’s of Life
Ever since the pandemic, you’ve watched your high school senior overcome one disappointment after another as their senior events were canceled. The most disappointing event canceled (or postponed) was their high school graduation.
With these cancellations, you’re committed to making this summer extra-special for your child before they head off to college. As you help them enjoy the summer and prepare for college, include conversations about financial management.
While it’s not exciting or what you had in mind, it’s a conversation more comfortable to have now while they are under your roof. It’s also a conversation easier to have before they make a financial mistake.
Using current financial events, you can help them understand the importance of financial management. Your message may be better heard if you have several conversations instead of one long drawn out session.
Before engaging in any conversation about money with your child, discuss these topics with your spouse. If you differ in opinion on some topics, especially how much your child can spend, reach common ground before talking with your child.
Here are four financial management topics to cover this summer with your college-bound child.
1- Financial Aid/Scholarship:
If paying for your child’s college depends on receiving money from financial aid or a scholarship, then review the terms of the agreement with your child.
If there are deadlines for submitting information, have your child schedule alerts on their smartphone. This action will allow them to take responsibility for their student loan.
If you both review this information now, it will help prevent any oversight that may cause penalty fees or revocation.
2- Plastic (Debit and Credit Cards):
Using a debit card or credit card is very easy. Just swipe and take your purchase.
With this ease, it’s easy to forget to check your balance or keep up with it.
Help your child understand how to view their purchase history and current balance with a smartphone app. While it may seem common sense to you, it may not be for your child.
Encourage them to check this information frequently for fraud.
Also, discuss how credit card fees are calculated and accumulate when payments are not made on time.
Being away from home and in college is an exciting time. It’ll give your child time to learn more about themselves.
It’s also a time when they begin learning how to manage their finances. Help them by developing a spending plan.
Keep it simple with these seven categories:
Housing (rent, utilities, supplies, furnishings)
Transportation (parking, fuel, maintenance, Uber/Lyft, public transit)
Food (groceries, dining out, delivery)
Personal care (haircuts, grooming products, clothing, laundry, dry cleaning)
Entertainment (movies, concerts, Greek life, getaways)
Health (copays, expenses not covered by insurance, fitness)
Gifts (birthdays, holidays, charity)
If they are taking their pet to college, then add those expenses as a spending category. Your child will need to budget for pet food, vet bills, toys, pet sitters, and other costs generated by their pet.
If your child intends to work while in school, then identify which expenses they will be responsible for paying. With the additional income, add “savings” as another spending category. This category will help them learn to save for future spending such as upcoming events or purchases.
Helping them develop a spending plan will also give you the opportunity to share your advice, as well as set parameters on what you are willing to pay for while they are at college.
Having a smartphone is very convenient for managing finances. Your child can easily access their bank account and pay for items.
With this easy access, it becomes a target for thieves. Discuss with your child how to protect information on their smartphone.
Talk about what to do if it is stolen. Encourage them to safeguard their passwords.
Also, address security for their debit card, credit card, and laptop.
Transitioning to life at college will be exciting for your child. At times, it may be overwhelming for them, especially if they are relocating to another state.
You can help ease the burden by having conversations about how to handle financial decisions. It will help establish awareness of money and instill good financial management behaviors – something they will need to live independently after college.
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA™, RICP®, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing spending plans, comprehensive financial plans, divorce financial reviews, retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”