Money Management: Preparing Students for the Real World

Teenagers will have to take on much more responsibility before they head off to college as it will be their first true foray into adulthood. While they may be excited about this, you as a parent know there are a number of different skills they do not yet possess because of their real-world inexperience.

The best education is often through experience; however, this shouldn’t necessarily be the case when it comes to money. With credit cards and the ability for an inexperienced college age teenager to spend themselves into debt, it is important for parents to talk to their graduating teens about money management before heading off into the real world. Below are some of the most helpful tips parents should take advantage of.

Know Weekly and Monthly Costs of Their Social Lives

While teenagers are in school, for which you have already paid or are in the process of paying off, they will always need extra money so they can enjoy themselves. That’s what college is all about, isn’t it? Financial adviser Dave Ramsey points out that it is important to know if they are planning on joining the Greek system, as this can be very expensive due to parties, formals and other activities. So the better you know what’s going on in your teenager’s life, the better you can budget.

Get a Credit Card With a Low Limit

Award your teen a credit card, if they don’t already have one, with a very low limit. Tell them you will pay it up to a point but after they have exceeded the amount they are supposed to spend, the money is coming out of their pocket. While this is somewhat of an empty threat, since your teen’s money is most likely your money, it will start to show him the consequences. If he keeps exceeding the total amount on the credit card, then you can simply shut down the card and disallow spending.

Teach Them About Identity Theft

If they are using a credit card and spending on their own more freely, then it is critical that you teach your college bound teen about identity theft. As this happens to millions upon millions of adults every year, teens are arguably more vulnerable to thieves who can steal their identity and put them into serious debt or tarnish their credit for the future. It may be a good idea to even sign them up with an identity theft security program like LifeLock Identity Theft, which will protect them and their credit in the event that their identity is stolen. These programs will shut down their cards and let authorities know about the identity theft among other security measures, so that thieves can’t get far with the information and really cause your teenager true financial damage.

Budget Everything Out

According to Family Circle, it is smart for you as a parent to sit down with your teen and estimate exactly how much money they will have while in college. Give them exact figures and tell them they cannot exceed that amount; this will teach them how to budget independently. Learning to spend money properly takes a bit of time and experience, so be patient with them. As you probably know from first-hand experience, even some adults have had and continue to struggle with poor spending money habits. So, like their education in the classroom, your teenager will have to learn this life lesson on their own time.

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Lauren Anderson is a certified school counselor who's passionate about helping students all over the world successfully transition from high school to college! After spending 6 years as a business professional, she obtained her Master’s degree in School Counseling and now spends her spare time helping students.

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