3 Ways To Create Financial Success for Kids Going To College
College Bound – Is Your Child Organized With Their Money? 3 Things to Do Right Now in Order to Create Financial Success With Your Kids
“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” ~ Will Smith
‘Do you think you will cry?’ I have been asked this at least half a dozen times in the last few weeks as our family prepares for our daughter to head off to university. Part of me is in serious denial as I wrestle with the notion that my ‘baby’ may not ever fully live at home again and is going to be planted on the opposite coast. Another part of me is in my organizational brain consumed with the numerous lists that denote all of the things that we must get done before she leaves. This is unchartered territory.
In this series we are affectionately calling, ‘Dorm Life,’ our SIYP Team, and myself, will be spending the next few weeks writing about strategies to help parents prepare for the inevitable. It doesn’t matter how old your children are, there will be tips for kids of all ages.
Don’t worry, we will continue to also bring you our best ideas, stats and facts to help you become more productive in your business life too. A friend once said, ‘Life is business and business is life.’ At Step Into Your Power™ we understand that all too well as each one of our staffers still has children at home. Navigating parenting and business is an interesting challenge and our hope is that you will be able to do both in a much more balanced way.
This week, the focus is on budgeting with your college bound child. Sometimes we think that our kids have a handle on how much things cost, but they might not be fully aware of how it all adds up.
Preparing your child, even those still at home, with the necessary skills to create, and live into, a budget is essential. I have several friends who did not prepare their children for life away from home only to constantly lament how much money they are spending. We are not doing our children any favors if we are allowing them free reign with cash. Instead we are doing the opposite – we are teaching them to live in a false world where spending other people’s money is alright.
With this in mind, here are some tips to apply to your kids. The earlier you start, the better off you will be.
1. Let Them Do the Grocery Shopping
I send Avery and AJ to do our grocery shopping. They have list and know that they must stick to it. Health is paramount in our house, and we will spend slightly more to eat organic fresh fruits and vegetables. The kids appreciate the way we eat. However, on more than one occasion, they have come home with sticker shock at how much certain items cost.
I did start them early, from the age of five, asking them to speculate on how much the total grocery bill would be as we were checking out. Eventually they became fairly accurate. They also understand that groceries are purchased with after-tax dollars so whatever that bill is – we had to make about double to pay for it.
Start teaching your kids about the cost of food. Even if they are fairly young, it will give them an appreciation about leaving food on their plate, taking more than they can eat, and waste.
2. Teach Them the Cost of Living
A few years back I pulled out a flip chart and asked the kids to guess the cost of all of our household expenses. We included everything from water, to electricity, to groceries. After we tallied everything, I explained to the kids what was a tax write-off and what wasn’t, due to operating a business from home. I then doubled the amount of non-deductibles and illustrated that we had to make that amount before tax in order to cover expenses. It was very illuminating.
Children as young as three can grasp the concept of numbers and subtraction, some even younger. Start teaching your kids how much things cost. It is never too early. When they do go out on their own, they will be much less likely to underestimate their own expenses.
3. Have Them Make a Budget
Before your kids leave for college, have them create a budget. There are great sample budgets online. Some require a passcode and registration while others are available by simply clicking on ‘Google Images.’ Include basic items such as clothing and transportation and then add gym membership, meals and entertainment, and whatever else is applicable to your child.
One of the things we did with Avery was a matching bonus. For every dollar she saved from her summer job, we agreed to match the after tax amount. This will be all of the spending money she gets for a year. Not all families have the ability to do this, and there was a point at which we did not either.
I do not believe in just giving kids money, I feel they need to earn it. In our house, we have a job board – do a job, and get paid the applicable amount. Our children are not handed things, or just given money; they purchase items with their own income. We want to teach our children the ways of the ‘real world’ so they are not lax with their money. Teaching them budgeting and how to be fiscally responsible at an early age definitely prepares them for life.
Lastly, I would love to hear how you are preparing your children to create financial success on their own. Please feel free to post your comments. Additionally, if you would like us to write about a topic, do not hesitate to send in your suggestions to firstname.lastname@example.org .
Susan Sly is a best selling author, work life balance expert, speaker and entrepreneur. She has appeared on CNN, CNBC, Fox, Lifetime Television and the CBN. Susan is the mother of five children and resides in Scottsdale, Arizona.