It’s unbelievable how many students graduate from high school or college with absolutely no idea how to manage their personal finances. These days so many young people are dealing with tens of thousands of dollars in student debt, you would think that a class on personal finance would be mandatory. Don’t let your children learn financial lessons the hard way. Here are the 5 financial lessons you need to teach your children before they move out.
How to Manage Her Credit
Most parents have no idea how to talk to their children about credit cards. Instead of teaching our kids about how to properly manage their credit, we scare them into thinking that credit cards are the enemy. Many parents got into trouble with credit cards early on, and now they want to protect their children from the same fate. Telling your child to stay away from credit cards is not the answer! Sit down with her and help her to examine the pros and cons of credit cards. If you teach her one lesson to remember about credit, teach her that the most important thing she can do is pay off her bill each and every month. This will save her thousands of dollars down the road.
What to Look for in a Lease
Before your child moves into her first apartment, it is vital that she understands exactly what she is signing up for. There are several things she needs to be sure to look for in her lease before signing on. These items include the names and addresses of everyone involved, the monthly rent and lease terms, the details of the security deposit, what her rent actually covers, the maintenance agreement and any personal touches such as the policy on pets, painting or hanging pictures. Make sure she knows never to sign anything that she doesn’t understand, that seems incomplete or is missing details of any previous oral agreements.
How to Create a Budget
When your child gets her first full time job the salary, no matter how modest, may make her feel as if she has won the lottery. Sadly, after paying for rent, utilities, student loans, transportation, groceries and other necessities of apartment life, there likely won’t be much money left over for fun. Explain to her the importance of sitting down at the beginning of the month, or at least every few months, and calculating how much money will be coming in, how much money will be going out, and how much she has to spend on fun, clothes and going out with friends. This meeting will help keep her from overspending and calling you for financial help.
How to Split Costs with Her Roommates
It is not just important to teach your child how to create a personal budget, but also how to create a budget with her roommates. Explain that while they should have a schedule for who buys items like toilet paper and paper towels, monthly bills should always be split 50/50. This will keep your child from being taken advantage of by roommates that may not be as financially savvy.
How to Save at the Supermarket
While you may be saying to yourself “Of course my child understands how to save money at the supermarket!” if she has never actually been grocery shopping on her own, she may have no idea. Teach her about the value of clipping coupons, using reward cards and buying generic foods instead of name brands. A quick lesson at the grocery store can go a long way towards helping her stay on budget and to stay in control of her personal finances.
Author Bio: Kenny Soto writer for the blog at MyMove.com. Visit My Move for parenting tips, checklists and hand-picked deals to make your child’s move more rewarding and easier on their wallet.