It is never too late to have the dreaded talk with your child
Make sure you have a talk with your soon-to-be college-bound child about personal finance.
It is that time of year when soon-to-be high school graduates are filling out applications and trying to decide on their college of choice. Having a high school senior in my own home, I find myself talking to fellow parents on this subject and these conversations end up being centered on money; how are we going to pay for college and how is he/she going to respond to being on their own financially? Besides doing some extra leg work in looking for a few local scholarships and a part time summer job, my son’s overall college costs are out of his control. But he will be on his own financially for the first time in his life. Thus, I am setting up a scenario in the very near future in which we are going to have “a talk.” The below information is a good starting point that can be built upon over time.
My goal is not to tell my son what he will and will not do financially, but rather to make sure that he has a better understanding of a few financial definitions and principles, and that he applies these as college life comes his way. Plus, this way we can both agree on what we mean during our ongoing discussions, and that these discussions do not contain some “fine print issues” that may come up in a later date. Below are six definitions (from Dollar Works 2, the primary personal finance curriculum for Michigan State University Extension) that I want to use to get our conversation going:
- Needs: Basic things necessary for life. Food, shelter, clothing, and health care. Examples; College food plan, dorm room, clothing that can withstand him doing his own laundry. A basic cell phone can be debatable?
- Wants: Things a person would like to have. Eating out, getting own apartment, designer clothing, a smart phone.
- Choice: An option that could be selected when making a decision. Example; Eating on the food plan instead of going out.
- Control: The ability to change a situation. Example; Just because everyone else is doing it does not mean you have to.
- Spending Plan (journal): An active strategy of tracking your money. Example; write down what is bought and how much it cost as it happens. This allows you to measure where your money actually went, and changes can be made if necessary. I hope he chooses to use a little flip notebook.
- Budget: A plan for your future income and expenditures that will be used as a guideline for spending and saving. Example; By examining what is written down in your spending plan and applying it to a good monthly budget, you can help ensure your bills are paid on time, have funds to cover unexpected emergencies, and reach any financial goals.
If you are a parent of a child who is graduating from high school this year, or close to one, please know that Michigan State University Extension offers money management programs that teach techniques on creating a spending plan and ways to “find” money to save. For more information visit MI Money Health.