Becoming a college student for your kids means the beginning of a different chapter in life and a gateway to new experiences, a time for exploration of academic interests, meeting new people, and becoming financially independent. The latter is probably what most parents think about.
For parents, getting your kids ready to be successful at college financially means finding the fine balance between providing them with sufficient funds and teaching them how to manage them.
Here are some of the most important steps to take when making financial preparations before your child goes to college.
Work on the budget with your college kid
Many parents plan to simply supply their college kid with extra spending money but this offer is as generous as it is hazardous. If you pay in a whole semester’s or even years’ worth of cash without some kind of a framework on how that money should be distributed, chances are that by October, your kid will be broke, hungry, and with loads of dirty laundry. To avoid this scenario, make sure you have a serious conversation with your kids regarding the importance of intentional budgeting. Decide together on a month-to-month spending plan that allows some unexpected expenses and make sure they understand how far you’re willing to go and what is expected from them.
Let your kids learn from their mistakes
One of the best things parents, in general, can do is let their kids learn from their own mistakes even if it means a short-term financial struggle and mismanagement of money. The kids will face much less serious consequences than their parents would as adults but the experiences they get in the process will be precious. Naturally, this doesn’t mean you should leave your kids completely helpless but simply put limits on how dangerous this experience could be. Work out with your kids some ground rules regarding exactly how to make their money last, teach them how to use a debit and credit card with a low limit, and recap their finances at the end of each semester.
Between wanting to fit in the new environment while still missing the old one, there’s bound to be some overspending so make sure you act with understanding and help them to work out a solution and a plan so it doesn’t happen again.
Diversify your investments
Lots of parents already have a certain amount of money invested long before the kids get old enough for college as a way of securing their future. However, most of them shy away from investing in precious metals to minimize the risks but the growth on such investments can still be a significant factor at this stage of your life. You might look into a combination of bonds, stocks, mutual funds, and precious metals that will fit your lifestyle, risk behavior, investment time frame, and liquidity needs. For instance, the palladium price chart history demonstrates a steady rise in price for the last decade whereas stock prices from some world companies jumped two-fold in the last few years.
Contact your insurance carrier
When a big change is about to happen in your family, such as your kid moving out and going to college, you need to inform your insurance company, especially if they’re not taking a car with them. The reason is that this could drop your rates. Also, you need to check what medical facilities are close to your kid’s college that are in-network as most health providers extend their coverage to college students but there could still be unexpected costs if your kid visits the student medical center.
Moreover, your homeowner’s policy may not cover your kids living off-campus so you might consider renter’s policy and with all the electronics kids today possess, from their iPads, mobiles, laptops, and headphones, you should document them all with the receipts and get a cost estimate from your insurance company.
Going off to college and moving out of a family home is already a stressful moment in life for both the parents and the kids, so there’s no need to add more financial worry to the mix. Follow the steps listed here so you can all make a smoother transition and your kids could get a stress-free beginning of the new school year away from home.