Your kids are back in school, and chances are money management is missing from the curriculum. If you’ve got a college-bound high school student, now is the time to teach financial responsibility.
Tracy Frizzell is the executive director of the Economic Awareness Council, an Illinois nonprofit dedicated to increasing financial literacy among children and teens. Frizzell says drafting a budget is a great first step in helping your high schooler become financially independent. She points parents to a website that includes a budget tool specifically designed for college students. Frizzell likes this tool because it includes expenses specific to co-eds, like travel costs to and from school. The site also provides data on average amounts Illinois college students spend on books or entertainment to help families make estimates.
“This is a great thing to work on with students throughout their senior year,” Frizzell says. “If you start next May, it’s a little late.”
Even if you’re prepared to pick up the entire tab for college, Frizzell says students are often more successful if they have a personal financial stake in their education. A 2010 Washington University study suggests that teens with savings accounts are seven times more likely to attend college, she says.
“I would definitely recommend, however they can—getting summer jobs, mowing lawns on weekends or saving birthday money—that kids try to save up a small amount of money for college,” Frizzell says.
North Shore Market President of BMO Harris Bank Susan Oleari has age-specific tips for parents teaching financial responsibility, including a useful “Helpful Steps for Parents” page. She says parents can teach teens the value of saving by having them set a specific goal—buying a TV for their dorm room, for example—and then helping them plan how they’ll earn the money to fund the purchase.
Oleari also encourages parents to talk openly about college costs. If you’ve saved for a school that costs $30,000 annually, but your student has her sights set on a $40,000-a-year university, work together to bridge the gap.
“You have to be really deliberate about this stuff instead of hoping they are going to get it through osmosis,” Oleari says. “You are the teacher, and you have to invest the time in your kids to teach them these life lessons.”
Boston-area high school teacher Jill Suskind says parents should go beyond basics and teach teens habits to become wealth builders before adulthood. That’s why she developed Wealth Quest for Teens an online program that gives parents resources to teach money management skills, including lessons in budgeting, saving and philanthropy.
What are you doing to help your kids gain more financial independence? Comment below!