30 Aug When Should You Have Your First “Money Talk” With Your Children?
Actually that title is probably a bit of a misnomer. More accurately, it should be, “How often should you talk about money with your children?” And the answer is…their entire life! Well, maybe you don’t need to lean over the baby crib to whisper about variable interest rates and the dangers of easy credit, but you should definitely be starting to put aside some money to use for their future college education. Talk more about paying for college as your baby grows, and also plant other money lessons into your young one’s head. Here are a few mini-money talks you can have along the way:
• Young children: This is the time to help your children understand the value of money. Perhaps you can start with a small allowance or pay something for extra chores around the house. Of course it is your responsibility to take care of the essentials, but you can teach young children how to save their money if there is something special to buy.
• Middle school: Start talking seriously about credit and college costs. Let your child know how much you have already saved and start getting a general idea of what it costs to pay for a college education. Help your student understand the relationship between good grades and scholarships, and discuss the likelihood of your family qualifying for financial aid. Set a realistic college budget now so your student starts making the connection between cost and available money. Perhaps your child can start saving money towards a college fund as well.
• High school: Don’t wait until the junior or senior year to think about paying for college. Spend time with your freshman or sophomore exploring college websites, learning about financial aid, and searching for potential scholarships. This will make you a team going forward as you ponder decisions about which college is best for your child.
• College: The money lessons continue even though your student is in college. Set a budget for monthly expenses and provide lessons about using student loans wisely. After graduation, help your child learn how to budget for student loan payments.
Parents of students who will attend college in the fall of 2017 may have to hold money talks with their college-bound students earlier than expected. The FAFSA, which is the starting point for most forms of student financial aid, will be online beginning October 1, 2016. You can start getting ideas now about how much financial aid you might be eligible to receive, but be prepared to make decisions this year about which college your child can realistically afford to attend.
Get more information on teaching children about money in my book, Secrets of a Financial Aid Pro. It talks about good money habits from crib to college, reviews the entire financial aid process, and educates readers on the proper use of debt. Order it now, and think ahead about how your family is going to manage college finances.