If you're a frugal family, it's probably important to you to pass those values on to your children as well. The first big test for many kids will be when they head off to college. For the first time, they will need to figure out how to make their funds last while paying for the things they need and at least some of the things they want. It might be their first time really having to think about a budget. With the tips below, you can help teach your child how to save money.
Paying for School
First, you need to know how much money your child will have for school. School is expensive, so even if there is financial aid, scholarships and grants, it may not be enough to cover tuition, room and board. One option is for you to take out a low-rate Private Parent Loan. This can help you take care of your kid even if you don't have much in savings to cover the costs of their college.
Tuition is a fixed expense. Other expenses depend on the situation. It will be a lot easier to budget for room and board if your kid spends at least the first year living in a dormitory on campus and eating the school meal plan than if they live off campus and are responsible for their own food. In the latter case, if they don't yet know where they are going to live, the college probably can provide some information about average rents in the area and other costs of living. You can use this information to help your child get started on the next step, budgeting.
How good is your child with money? It is a good idea to follow tips for money role modeling and be the example for how your kids develop their relationship with their finances. Although you probably have a good idea of whether your child is frugal, a spendthrift or something in between, and this will inform how you approach this process. The first step is to take the information you have about expenses plus how much you know your child will have to spend each semester and figuring out how to allocate those funds.
A strict budget is not necessary if your kid more or less tends to stay within the spending limits, but you might want to drill down more if they tend to be either careless or very frugal with money. In the latter case, using an app to track spending and help them budget can relieve some anxiety and let them know that it's okay to splurge now and again. In the former case, an app can offer an easy warning that they are getting near their spending limit in any given category.
Talk About Credit Cards
You need to have a talk about credit cards because these can be the downfall of many a student. The offers may come fast and furious, and your child may not realize how easy it is to get into high-interest debt. You might want them to have a card in case of emergencies, but if you are afraid, they'll misuse it, you can make it a prepaid card or just get one with a low limit.