4 Ways To Help Your College Student Understand Finance

Finance can be a delicate subject and unfortunately for many young adults, it is a topic full of mystery and pitfalls. Many young adults learn financial lessons the hard way, which often leads to frustration and painful consequences. This is why it is important to address this subject with your daughter or with your son when they are going away to college, especially when they are about to become more independent.

Let's take a look at some tips for making this conversation helpful and satisfying for both sides.

Start early and revisit

It is best not to leave the “money talk” until the last minute when your student's mind is filled with the upcoming freedom, parties and all of the changes that are about to occur. Rather, it is a good idea to talk sometime before they leave for college and then revisit the conversation. Let your son or daughter ask questions to clear any doubts.

Allow some practice

It might also be a good idea to do a “trial run” if your student agrees to it and review the results in a polite manner. This trial run could include shopping for groceries with a specific budget, handling a couple of small financial matters, paying bills and other tasks that might be new to your daughter or your son. Let your student think about savings and see how it would work in real life. The purpose of this trial run is to provide them with a learning opportunity with guidance from you, as it will make the financial experiences in college much more understandable.

Make a budget together

Before they go to college, you can set a budget together. This will be a good exercise for future budgeting and it will also help them understand their college financial situation. Remember to listen closely to your student's suggestions and make the planning session a joint project.

Explain credit, loans and debts

These are important issues for many college students, but many people who are new to financial independence might have trouble with credit cards or a misunderstanding of how loans work. It is important to address these, as these subjects can often have negative consequences if they are not fully understood.

In the end, when you talk savings and finance with your college student, try to avoid turning the discussion into a lecture instead of a conversation.