Your “little baby” is a high school graduate who will be leaving for college soon. There are so many things you want to say and do, and so little time to do them in. With all the packing and organizing, be sure that you spend some time giving your student some of the financial insights you have worked so hard to gain. Here are a few topics you can use to get the discussion going:
• Learn to Live on a Budget Now: Although you will always think of him or her that way, your child isn’t a “baby” anymore. He or she is almost a full-grown adult who will soon be responsible for making major financial decisions in life. The time to learn those skills is now. Inform your child that “The Bank of Mom and Dad” is closed, and that the “Bank of Budget” is now open. Carefully review the expected monthly expenses, and discuss how much you are willing to cover, and how much you expect your child to earn. Although you will always be there for emergencies, this is still great practice for “real life” after graduation.
• Understand the Value of Money: The best money in college financial aid is that which is “free” through scholarships and grants. Everything else has to be earned through work-study programs or paid back through student loans. Make sure your student understands what is necessary to maintain eligibility for the existing scholarships and grants. This is not an entirely “free ride,” as your student will be expected to meet certain requirements regarding attendance, grades, and conduct. Don’t risk losing a major component of the financial aid package through irresponsible behavior.
• Be Careful with Student Loans: There has been a great deal of talk in the media about the “student loan debt crisis,” or even whether there is a crisis at all. Some have proposed that public universities should be free, while others say it is a matter of personal responsibility. The reality is that any changes to the student loan system will be years in the making, so this year’s rising freshmen have to make decisions based on how the system works now. Of course you want to educate your child to borrow as little as possible and to spend it wisely, so there will be less to repay. If you do have to borrow money, always use federal student loans first and then carefully research what is available from private student loan lenders. There are many differences from one private lender to another. Discover Student Loans, for example, has zero fees, competitive fixed or variable interest rates, and even offers a cash reward for good grades.
Enjoy some fun times together making lasting memories with your child, but also be sure that you spend time imparting your wisdom about money. Hard lessons learned now could make life so much easier for your dear child when he or she finally becomes a college graduate.