Money Talk with Children

Group of Teens Talking

Top 3 Ways to Prepare for College

Written by: Annette Harris, June 15, 2021

Recent high school graduates face many challenges when planning to enter college. One of these challenges is determining how to manage their finances when applying for financial assistance. Creating and maintaining a budget can allow for the successful management of an individual's finances while in college. Budgeting can help reduce the stressors of academic life and enable them to achieve their financial goals. Budgets are specific to everyone. Here are some tips for recent graduates to prepare for college.

Borrow Smart: When borrowing money for financial aid, it's essential to understand the difference between federal and private loans. Federal loans have a lower fixed interest rate and have better repayment terms than private loans. These can include your Stafford, Perkins, and Direct Plus loans. Alternatively, private loans may have higher interest rates that are variable and are based on your credit history. These loans may not offer repayment assistance and can require a cosigner, like a parent. If loans are needed, only accept the minimum amount required.

See my reference in Dear Graduate, Here’s What to Know About Your Money.

Pay on the loan as you go. If you have additional funds available while in college, pay the interest as you are enrolled. Paying the interest will reduce your future monthly payments when you graduate or enter the repayment period. Understanding loan repayment options, when payments are due, and where to send your payments can prepare you to start reducing the balance on your loan. In addition, developing a budget while in college will allow you to pay, at the minimum, the interest on your loan and can help you save towards future financial goals during and after graduation.

Establish a Budget: In 5 Money Lessons for New College Graduates, I discussed ways that new college graduates could begin budgeting and saving. Here are some more valuable tips.

  • Establish a budget when the first paycheck is received.

  • Set up automatic savings deposits through payroll deduction.

  • Pay more than the minimum on student loans and credit card payments.

  • Pay off credit card balances in full monthly.

  • Use a debit card to pay for purchases under $100.

Using these valuable tips and suggestions can create a successful money management roadmap.

Top 3 Ways to Teach Your Children about Finances

Written by: Annette Harris, May 4, 2021

Teaching your children about family finances will benefit them presently and in the future. Understanding finances as a child can enable children to develop a positive money mindset and habits as they mature in life. Explaining the family budget, letting them know about your financial goals, and asking them if they have any questions lets children know that it’s okay to talk about money openly.

The Family Budget

Opening your monthly budget tracker and showing your children your income and expenses may seem like a daunting task. However, once your monthly budget is complete, a sense of relief can result, and it opens up the lines of communication. The first thing your child may see is the income and be surprised at the amount of money you show them, but don’t stop there. Review the monthly expenses with your child, and they will see a decrease in the available funds. This can be a wake-up call to your child and educate them that there is a cost to just about everything. It may also uncover some unanswered questions that lingered in their mind.

See: 6 Tips for Getting Your Kid Involved in the Family Budget This Year

Goal Review

Now that the budget has been reviewed, you may have additional funds available. It may be helpful to discuss your financial goals with your child so that they understand that this is not “leftover money.” This can also be a method of instilling goal setting into your child’s life. Setting goals around money sets a sense of purpose for saving and earning money. Saving to save may not have the same value as saving for a purpose.

Ask Questions

Creating a dialogue around money lets your children know that it’s okay to discuss cash and encourages meaningful family conversations. You can ask your child if they have any questions about money to continue the conversation. If you don’t have the answer to their questions, you can let them know that. It can be a learning moment for everyone and enable you to improve the way you manage your family’s finances.

Teaching your children today can set the foundation for the financial decisions they will make throughout their lifetime.

See: Warren Buffet's 6 tricks to teach kids about money.