It’s that time of the year again. Thoughts are turning to back to school and some parents will be packing up their kids and heading out to residences to start a new year of post-secondary education. Whether they are heading out on their own or living at home, this newfound independence comes with a measure of responsibility and a whole lot of freedom. One of the best ways parents can help prepare their kids for this new reality is to take the time to have an honest conversation about money and teach their kids how to manage their finances, and what dangerous pitfalls to avoid.
Whether they are a new student or returning for another year, here are Four Financial Basics to help set your child up for a financially successful school year:
- Have a money conversation with your child before they have to start balancing their books.
You are the role model for your children when it comes to money and if you do not think they are watching your relationship with money, think again. Draw up a monthly budget with them and ask them what strategies they think they can put in place to be able to live within their means. Ask them how they think they will be able to cope the next month if they go over budget the month before.
- Talk to them about credit cards that are often handed out like candy on University campuses.
Now do not get me wrong here! I am not saying that credit cards are bad but more than one is a recipe for disaster. Some kids are using one card to pay off the other and hardly making the minimum monthly payment let alone eating. If you want your child to have a credit card for things like buying books on campus and emergencies, then consider putting a low maximum limit on the card (e.g. $500). You can monitor the usage even though you are not always with them. Another option is a pre-paid credit card that works very similar to a gift card and does not affect an individual’s credit ratings. Explain to them how they can easily rack up debt and tear down their credit rating, which could take them years to repay and repair.
- Tax tips for students and parents.
Many students think they do not need to file a tax return because according to them they are dirt poor. Well, tax agencies wear a different set of glasses than they do and they are not rose coloured. A number of students work in restaurants during the school year and receive tips and it is important to make sure they understand that they have to keep track of these tips. Here is a handy guide to help you with student tax questions.
Parents: you also need to be aware of what affects you from a tax standpoint while your child is in school. The Canada Revenue Agency website and the IRS website contain information for both students and parents around a number of important topics.
- Insurance coverage for personal items.
There is so much going on when your child is returning to school that insurance on personal belonging is often lost in the chaos.
Statistics show that there are nearly 4,000 fires each year in university residence halls and over 12,000 thefts. So taking into account these statistics, it should be easy to see the need for insurance to protect your child’s property.
The bill can add up quickly when you factor in a laptop computer, cell phones, clothing, etc.
Going off to university or college for the first time or returning for another year should be an exciting time for your son or daughter. Therefore, setting them up for success will allow them to start their year on a high note and begin the next chapter of their lives in control of their financial future.
To learn more tips and strategies to help you take control of your family’s personal and financial future please visit the Shop to order my best-selling book, WITH THE [STROKE] OF A PEN®, Claim your life. Follow me on Twitter and join the Claim Your Life Community on Facebook.