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How To Teach Financial Responsibility and Reduce the Costs of College
Parenting is hard work, and one of the worries that might plague you is how to cope financially. From childcare to education, financial matters may feel daunting, especially for first-time parents. However, there are many ways to help ease these financial burdens. From teenage years to easing the expenses of college, here are some ways to teach your child how to be financially responsible and make their college years as affordable as possible.
Once your child reaches their teenage years, one way of helping them with finance is by teaching them how to manage their money. They might have their first job as early as high school, which is an exciting step to financial independence! After years of relying on you for all things finance, they’re taking their first steps towards making their own.
However, if you’re not careful, this new endeavor can be just as draining on your purse as it can be advantageous. Your teenager having their own source of income is exciting, and now they have the chance to buy whatever they want, and that’s where the issues may lie if you do not teach them money management.
Not only will this ensure they get to make the most of what they earn during this time but will teach them the necessary skills to manage their money in the future. Some may have already learned to save up the money they earn, while others may get caught up in spending all they have earned for all the things they can now buy.
Especially in our materialistic society, we are constantly bombarded with advertising for things we might not even need, and teenagers may find it difficult to ignore these, emptying their earnings just as quickly as they earn them.
Teenagers also do not have the worry of expenses like mortgage or rent that adults may have in the first place. It means they may be prone to waste their money on items they will only use once or not at all simply because of the allure of buying something with your own money.
The first thing you need to do is open a bank account for your teen where their employer can directly deposit their wages. Make sure to read up on the benefits the company provides and take advantage of their offers of advice. For example, whether it is to manage finances for education or to buy a car, Bonsai Finance offers insight into the various ways of approaching money management.
This can be followed by a debit card, which might be a good way to learn money management without the risk of credit cards and debt.
One of the ways to instill the idea of saving money to your teen is by opening a separate savings account. Through this, you can then arrange a monthly transfer from their main account. It may lead to the fundamental development of management skills that could set them up for the future. By saving a percentage of their salary every week or month, the savings will gradually accumulate.
Likewise, encourage “smart” purchases such as using discounts and sales. Encouragement always works, and something as simple as celebrating a milestone of saving a hundred dollars by treating them and their friends may do the trick.
Another aspect that may be a cause of financial worries is the introduction of cell phones and other electronic devices to your teen.
Although a cell phone may help reassure you and give you a way for your teen to keep in contact, this is also one of the things you, as a parent, may have the least control in.
In our current society, children as young as eight own a cell phone and there is always that sense of wanting to have one simply because others have it too or that it’s in fashion. It is difficult to figure out the expenses that come with owning these devices. With cell phone companies lining up to make you sign that contract, it may be difficult to truly weigh the pros and cons of these services, and occasionally, phones come with hidden expensive options that you may fail to take into account.
Even with a contract, extra charges may apply as a result of using the applications too much, going over the limit in text messaging and phone calls and sometimes even downloading sound and photos can increase the monthly bill.
Phones can increase communication between you and your teen and with the many free apps, you can keep in contact in many ways. However, this can also affect their social life, as this means they will be more in the loop of what’s happening where. Cell phones can make it easier to organize your schedule, but this can also mean increasing the costs of going out.
One way to instill a sense of responsibility to your child is perhaps by having them pay a percentage of their monthly phone bill. It may prevent them from going over the limit and sets them up for future contracts and financial management.
Paying for college can be scary. Four-year college tuition and fees average from more than $9000 at a public institution to nearly $35,000 at private institutions. The sheer unknown that comes with sending your child out in their first foray of independence without a parent’s supervision can be daunting, but there are many ways to help ease the burden, especially in financial matters.
Many students and their families often confide in their high school’s counselor on their advice during the college application process. According to a survey from the American Student Alliance, school counselors often lack the training and other resources needed to effectively advise students on the financial matters that come with college. Therefore if you find the counselor at your child’s school to be not as informative as you would have liked, then it’s probably best to confide in a third party, or you can even do the research yourself.
Paying for college can be tough, but it doesn’t have to be. One of the most advised ways of tackling this is by applying for scholarships. This is a good way to help pay for tuition and also means less for you and your child to cover with savings and loans. There are many free online sources to advice you on scholarships; you should never have to pay for this.
Grants and scholarships are considered “gift aids” and does not need to be repaid. While scholarships are awarded based on merit, grants are typically awarded on the basis of financial need. Private scholarships, on the other hand, are awarded by private organizations, non-profits or philanthropists to name a few.
There are many types of scholarships based on many different factors such as academic achievement, sports, first-generation and under-represented groups.
While scholarships are one of the ways to tackle college costs, there are many other ways for students and their families to lower this financial burden.
One of which is to apply for financial aid by completing and submitting the Free Application for Federal Student Aid, available from October 1s. It’s suggested that the sooner you complete this form, the higher chance your request will be accepted.
Taking Advanced Placement or AP courses have been shown to help save on tuition fees as many schools tend to award credits based on AP scores.
Make sure to check if you qualify for the Tuition and Fees Deduction which was renewed by Congress on February 2018 and allows taxpayers to deduct qualified education expenses such as tuition fees by up to $4000. If you qualify, this may help reduce the burden of financing your education.
By applying to many of these opportunities, you may lessen the financial burden that comes with your child’s education and allows them to explore their independence and grow fully.
College provides many opportunities and many things to learn, and money management will be one of them. Yet with the worries that come with financial matters, there come solutions too. Whether it be to help with childcare, education or college, there are many ways to help manage and ease the financial burdens that come with them.