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How can you financially prepare your child for college?

November 22nd, 2011by admin


Financially prepare your child for collegeThere are a number of things you can do for your kids right now, to help them with their student finances later on. Besides the obvious college fund, you can begin teaching your kids about money management and budgeting from a really early age. We’ll suggest some ways to do this here.

 

Early years

Counting coins can help children develop a concept of money. They don’t need to know the value of the coins at this stage – that can come later, but they can role-play buying things with pretend coins and notes.

As they get towards the age of between, say, 7 and 11, they can learn about how many coins it takes to buy candy bars, apples and things they like. Putting into practice their counting, addition and subtraction at home will help them to apply it in the classroom.

 

High-school

Teenage children love to be treated like adults, so allow them a little responsibility with a cash incentive. Depending on the ability and willingness of your child, they could do chores around the house, cook a meal or get a part-time job around their classes.

Earning your own money is an important part of growing up. Learning to make that money last without extra hand-outs (or putting it into savings) develops a better understanding of what money management is like in the adult world.

This may be a good point at which to help them open their first bank account. Watching their savings grow can be a real confidence boost and it’s good practice for when they’re grown-ups.

 

College / leaving home

This is a risky period financially for your child. As they reach the age they can get credit cards, overdrafts and store cards of their own, they could get into debt problems further down the line if they haven’t learnt the money management lessons of the past.

Budgeting for expenses that they never had before – like rent and bills – can be difficult at first. A ‘managed’ bank account that puts part of their income (for bills) into a separate account can be a helpful stepping-stone to budgeting for their bills themselves. Some types of basic bank account provide this service which could be especially useful for a student. A basic bank account doesn’t have an overdraft, therefore they shouldn’t be tempted to overspend. You can see the features of this type of basic bank account here.

You could also help them to draw up their own budget. Include their income (grants, scholarships, loans, money from you, money from employment) and their essential living costs (rent, bills), as well as money they put into savings. As long as they stick to their budget, there’s no reason for them to get into trouble with debt.

Finally, not all debt is bad and for many people going to college, it’s necessary to borrow money to pay your way. However, encouraging your kids to earn their own money, live within their means and spend wisely should help them avoid getting into the kind of debt that can cause problems later on.

The post was kindly provided by Ian Williams and thinkbanking.co.uk who provide banking services and basic bank accounts.




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