Not sure how to prepare your kid for the responsibilities that come with managing money in university? Your kid will be faced with many spending decisions when entering university. Even though you can’t be there for every financial decision they make, you can teach them how to manage their money and make better financial choices.
Here are 6 things you can do to prepare them to manage money in university:
- Help them develop a spending plan before they start school. Whether they will be living at home, in residence or off-campus, help them develop a spending plan (budget) for the school year. 70% of Canadians will rely on student loans to fund part or all their education. Receiving large sums of money without a plan on how to manage money in university and make the money last can leave students feeling overwhelmed and stressed. Encourage them to review the free Money 101: Budgeting Basics for Further Education book published by the Government of Alberta. The Government of Canada also provides information on how to fund post-secondary studies.
- Help them learn the importance of paying bills on time and managing expenses. With little financial responsibility, many young people have a lot of discretionary income. Help them learn the importance of spending on both their needs and wants. Get them to take on some financial responsibilities like paying for their cell phone bill, gas, vehicle insurance etc.
- Help them understand how student loans work and repayment options before they take out the loan. Have them attend a free Student Loan Repayment webinar. This webinar is facilitated by the National Student Loan Service Centre (NSLSC). If they will be taking out a student line of credit, be sure to go over the loan agreement and their responsibility for repayment.
- Teach them the importance of delayed gratification. Delayed gratification teaches us, we can get some of the things we want, just not all at the same time. Learning this lesson at an early age can help your adolescent minimize financial stress in the future. A good way to help them learn is to have them set a SMART financial goal for an expensive item they want to buy. This goal should be specific, measurable, attainable, realistic and time-bound. Have them save their own money towards this goal and encourage them along the way.
- Assist them in understanding the responsibilities of having a credit card. Since you must be at least 18 years old to get a credit card, many young people’s exposure to credit happens during their post-secondary studies. Teach them the importance of paying off debt in full and on time. Be open to lending them money, but be sure to draft a loan agreement spelling out the terms of the loan and the responsibilities of the borrower. This exercise can teach them credit can be costly if not paid back in a timely manner.
- Have them borrow a book or research online how to save money while in school. From buying or renting used books, purchasing e-books, working on campus, applying for scholarships to using a student discount card, there are many tips for students to save and manage money in university. Encourage them to do some research on how they can cut down on expenses. Visit the Money Mentors website to access free online finanical literacy resources.
Guest Post By: Money Mentors
Money Mentors is an Alberta-based, not-for-profit credit counselling agency and member of Credit Counselling Canada. Through a number of services, they help families and individuals recover from financial crisis and move forward. Since opening their doors in 1997 they’ve helped thousands of Albertans discover financial solutions, become debt free and ultimately live happier lives.