The time when you send your high school graduate out on his own is drawing near. Is your child financially prepared to function on his own? Does he realize the ins and outs of planning, saving and spending? Can he manage a workable budget? Here are five tips to help him start out on the right foot.
1) Before he goes out on his own, sit down with him and briefly outline a realistic budget with him. For this to work, he really needs to set the limits. You may want to guide the discussion by suggesting categories that he may have forgotten or by pointing out times when he underestimates the cost of things.
2) If you are sending him to college, and paying for most of his expenses, you should still encourage him to pay his own bills. This will help him when he is completely on his own. You may want to set a monthly limit that you are willing to pay and then let him work for anything extra.
3) Be sure to have a talk about credit cards with your child. College students are bombarded with credit card offers when they are on campus. They can win prizes, get free food and t-shirts just for applying. They often do not realize the consequences of applying for all this tuff on credit. Be sure you talk about paying off the balance each month as well.
4) If your child is going to take out student loans, be sure that he understands the long term implications of that. It is important that he realizes how much his monthly payment will likely be at the end of school. This may help him to borrow less money.
5) Be sure that your child understands the ins and outs of banking. This includes hidden fees, keeping a running balance and the dangers of overdrawing his account. It is important that he begins responsibly because he is more likely to carry his habits forward into the rest of his life.
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