A kiss on the cheek, a pat on the head, a car packed to the brim and your precious baby is off to begin the first steps of her adult life. You’ve fed her, raised her and kept her out of trouble (as much as possible, that is) and you’ve taught her how to live her life as a responsible adult.
Before she leaves, though, it is paramount to help her understand her finances and what adult life will have in store. Here are a few tips to include in the conversation to help your child become a financially responsible adult:
A penny saved is a penny earned, but more importantly, a penny that could be used to grow into a small fortune one day. Savings are an important part of any adult’s life as they help to steer clear of purchasing on credit and racking up unnecessary debt. Most things can wait, and saving up for things cuts out interest fees and creates a sense of accomplishment.
2. Create an Emergency Fund
Although this is similar to saving, it is for a different purpose. While you can save for a new car, a down payment on a house or apartment or something fun, an emergency fund is strictly for those unexpected things in life. A flat tire, fewer hours at work or any other sudden expense can be crippling, so it is important to have a good amount saved up for such occasions. A good rule of thumb is a month’s rent, or at least $1,000.
Even if it is only part time, having steady employment can help teach a college student how to manage responsibilities and priorities as well as give them a little extra money to save or use for fun. They will also receive real world experience in dealing with customers and bosses, even if it is not in their particular field.
When searching for a job post-college, it is always good to have experience to show you know how to work. But it will also be helpful if your field does not have a position available and you have to search for employment in a different profession.
As a parent, you want your child to be successful. Smart money management habits are a part of that success, and you’ll want to make sure your child is prepared to handle his or her money responsibly.