Helping Your Kids Prepare for College

One of the first thoughts you are probably going to have, after getting over the glow of becoming a new parent, is “how on Earth am I going to save for my child’s college education?” Here’s the truth: while you undoubtedly want to be the parent who finds a way to save up and pay for the entirety of the cost of sending your kids to University, it’s good to ask them to pay for at least a portion of it.

Helping your child figure out how to save up for college (and other major expenses) is one of the best habits that you can do as a parent. The other is teaching your kids how to handle credit.

So how do you accomplish these goals?

Allowances

There are some hot debates raging out there about whether or not giving your child an allowance is a good idea. On the one hand, you don’t want your kids to get used to receiving money for nothing. On the other, it’s a great way to start teaching your kids about money at an early age.

Some parents compromise on the issue by assigning a dollar value to certain chores (outside of the normal chores assigned to each child) to help kids get used to the idea of earning money instead of just getting it.

Saving V. Spending

Whatever your decision about giving an allowance, one thing is for sure: you want your kids to get used to saving as soon as possible. Set up a standing rule that your kids need to save at least 10% of everything they earn. When they’re little they can simply give that money to you and you can put it in a bank or even back in the bank for them. When they’re older, you can set up an independent savings account for them to use on their own.

Credit

As soon as you feel that your kids are old enough to be trusted with one (and are earning money independently), you should give them a credit card. You can find credit cards with the best interest rates listed at NerdWallet.

Another good idea is to set up a secured credit card for them with a very low credit limit. This way you don’t have to worry about them accidentally overcharging way too much and your getting stuck with the bill. The goal is to get them used to making payments and dealing with interest rates.

The goal is to teach them real world lessons about credit before they get to college and are forced to deal with overzealous credit card vendors. You don’t want them to get overly excited about an account with a 30% interest rate and no credit limit!

Frequent Reminders

Don’t’ forget to remind your kids that saving up for college is a worthy goal. It’s okay if they know that you plan on helping them with tuition. Just keep reminding them that they might also want to eat food that isn’t from a cafeteria and saving up for school can help them afford that stuff.

Good luck!