You, of course, want the best for your young adult child as they go off to college, but your teenager is also likely interested in spreading their wings a little bit as they embrace their new independence from Mom and Dad. College is often the first time young people have to make some of their own financial decisions, and it's natural for you to want to help them out. Here are some tips to keep in mind in order to help your kid get off to the right financial start in life.
Give Them the Credit Card Talk
College campuses are often overrun with representatives for credit card companies. They'll set up a table in the student union and offer a free t-shirt or some other small perk in exchange for signing up for a card. Make sure your new adult is educated on how credit cards work. Credit cards, ideally, should be used for emergencies only and not basic living expenses, especially at such a young age. Letting a credit card get out of control is one of the first ways that young people get into debt, so tell your child to be cautious. You alternatively could talk to your bank about adding your child to your own credit card. This would still let them use it in an emergency, but you'll be able to monitor the charges.
Early Investments Are Generally a Good Idea
Thanks to the power of compound interest, the earlier your student starts saving money for their future, the larger their nest egg will be in 30, 40, or 50 years. If you want to get your student involved in the stock market or mutual funds, consider bringing them in and letting them speak to your own financial advisor. Financial advisors are always looking for new clients, so this might be an opportunity for your student to set up their own account. You could even sweeten the pot by offering a financial incentive. Tell your child that if they get good grades you will deposit a certain amount of money into their new investment account.
An Emergency Fund Is Important to Have
Young adults sometimes burn through money as easily as Mom and Dad give it to them. While your student can probably get by on their own, you could consider opening a joint savings account with them and deposit some extra cash. Tell them the money is for emergencies only and that they can tap into that account as needed instead of always coming to you for money. If your name is also on the account, this should help you keep track of how your student is doing.
Reach out to one or more financial advisors today and see what kind of options are available for a young adult