Its high school graduation time and I first want to congratulate the graduates and their families. I also want to encourage the graduates to continue their education. College isn’t necessarily for everyone; however, to be successful in our new economy you’re going to need more than a high school diploma. Whether it’s a trade school or a community college, it is important to gain the skills necessary to be successful.
To be successful in our society, you must be able to manage your financial affairs. Therefore, for those of you who have children who will be freshmen in the fall, if you have not done so, this summer could be the last opportunity you have to make sure that your child has the skills to manage their finances when they go away to college.
It is important to realize that when your child goes away to school they’re 18 years of age, which means they’re a legal adult. The financial mistakes they make can stay with them for years to come and can even impact their ability to get a job. When I went to college it was much easier to stay within a budget because there wasn’t much to spend money on. Fast forward to today and college kids are bombarded with all sorts of advertisements that encourage them to spend, spend and spend some more. When I went to college it was difficult for a college kid to get their own charge card. Today, there are all sorts of offers encouraging kids to sign up for charge cards, including all sorts of free giveaways. The bottom line – your college student is going to be constantly bombarded with all sorts of offers. Your child has to have the financial wherewithal to resist the temptation to spend, spend and spend.
We all know that the cost of college has spiraled out of control and in too many cases college kids are graduating with a significant amount of debt. What makes the situation even worse is that the debt is not just for tuition and room and board. College kids are financing other purchases such as entertainment, travel, and clothing. Of course, college kids have a right to enjoy their college experience. However, everything has to be in moderation and since college kids are now adults and want to be treated as adults, it’s about time that they learn the birds and bees of personal finance.
It doesn’t matter whether you are paying for your child’s college education or there are loans taken out to pay for college or whatever the scenario, it is important that your child understands the importance of living within ones means. They need to learn that a charge card works best when it used for convenience purchases, not to finance a purchase. They need to know that paying the minimum on your charge card is not an option. They need to know how compound interest works and how expensive an item really is after you factor in the interest they would pay.
When I went to college life was simpler and the consequences of making a poor financial decision were not as great. Fast forward to today and life is far from simple. With the internet where people can shop 24/7, 365 days a year, if you are not disciplined with your money you can get yourself in trouble relatively quickly and that can stain your financial affairs for years to come. Therefore, it is important that you take time this summer to teach your child fiscal responsibility. After all, if you don’t take the time to teach them they run the risk of being burdened with debt for years and years to come. I recognize finances are not necessarily the easiest conversation to have; however, what is the alternative?
If you would like Rick to respond to your questions, please email Rick at email@example.com.