Talk candidly about the pitfalls of borrowing
Your kids will be bombarded by applications for credit cards and car loans starting in the college years and continuing as they move into the workforce, so have an open discussion about not taking on too much debt. Emphasize the importance of paying credit card bills on time and, if possible, in full. Explain that it's crucial to keep loan balances manageable to avoid credit record damage.
Help analyze career aspirations
As your kids choose what college to attend or whether to go to graduate school, encourage them to be realistic about their income prospects. For example, attending a very expensive university may not pay off if their goal is to work as a teacher. In lieu of additional years of schooling and debt, have they explored internships to gain vital job experience? Remind them that working for no pay now may be worthwhile if it opens the door to full-time employment later.
Offer selective financial support
Although providing unlimited resources to young adults could delay their financial independence, some expenses, such as medical insurance or career counseling, are worthwhile for parents to fund, particularly because the children may be unlikely to spring for those "luxuries" themselves.
Talk about the need to budget carefully
Now out on their own for the first time, your kids need to learn how to make larger sums of money from summer jobs or other sources last through an entire school year.
3 Questions to Ask Your Advisor
- What basic budgeting tools might my children use to gain financial skills?
- Which types of savings accounts are available that can help my children reach their financial goals?
- How do I help my older children build credit and what are their options for opening their own accounts?