It’s that time of year, when college admissions letters start to flood the mail boxes for those soon to be high school graduates. But along with those letters come hidden fees (yes, tuition is costly, but we’re talking about the everyday costs), something that most Chevron employees have to teach their children. Since most high schools don’t usually include a course in personal finance, here’s how to ensure that your college-bound young adult is equipped to manage day-to-day finances. Some Chevron parents instilled these lessons early on, so the worry isn’t nearly as serious. But there are some children that didn’t get that benefit; it isn’t too late to teach these lessons now.
The first semester of college comes with plenty of challenges—including basic money management tasks such as budgeting, paying bills, using credit cards, and managing debt. Fortunately, working with your freshman to develop sound money-management habits can help minimize costly financial mistakes. Below are a few ways to kick-start your child’s financial education.
Project Their Expenses
You don’t want your child to miss out on all the college experiences, so it would be smart to start by helping your child tally the full cost of college, including tuition, room and board, books, and incidentals such as movie tickets and late-night snacks. One avenue that you can take is to discuss which expenses you’ll fund and which your son or daughter will need to cover. Even if you’re footing most of the tab across the board, this process provides the student with a better understanding of the true cost of his or her college education.
Balance Credits and Debits
After projecting expenses, turn to income. If you are contributing, create a structured view of the student’s expenses. Rather than sending money on an as-needed basis, help the student develop budgeting skills by delivering a set amount on a regular schedule. In addition, help your child explore ways to earn extra money during the school year. While it’s helpful that you are providing money for your child to spend, you might also want to have them look into getting an on-campus job; it saves money on gas/transportation, plus the managers are always willing to work around class schedules.
Show How To Track Spending
Once you’ve mapped out projected expenses and income, encourage your child to use a notebook or spreadsheet to track his or her spending. If the money spent proves to be in line with the budget, great. If not, consider increasing your support, but only after brainstorming on ways to trim spending. For instance, students can save hundreds of dollars a semester by ordering used textbooks online; there’s also the option of renting textbooks, this works out great for books that your child only needs for a general course
Always look for other ways to cut costs. For instance, keeping a car on campus may yield big bills for parking and fill-ups. Also make a plan to hold regular budget conversations— and make it clear that any financial support is contingent on responsible money management. Budget-conscious students are more likely to rein in spending and get creative about saving money.
Discuss Ways To Avoid Debt
The easiest way to prevent your child from racking up debt is to declare credit cards off limits – at least for a few years. This will allow them to learn how to properly manage their money and live within their means. Helping your child develop solid financial habits as part of the college experience will pay dividends long after graduation. Something they will thank you for later.
Having already put one child through college, and a second one who is currently attending, I know firsthand how expensive it can get. So I would be happy to sit down with you to discuss the ways you can cover college tuition and still be able to help your college-bound young adult with some everyday costs. We’re knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to Chevron employees (in addition to the retirement, investment, and estate planning issues everybody faces). In fact, chances are you may know one of our Chevron clients and you can ask them how working with a financial planner has helped them.