5 Money Topics to Cover With Your Teen Before College Move-In

Getting your emerging adult ready for college can feel overwhelming, but it’s also an opportunity to prepare them to be financial grownups. Teens can benefit from early awareness of the world they will enter when they get out of school. Candid financial information early on gives them confidence and motivation and ideally smoothes the way to becoming financial grownups. 

Parents should review 5 financial topics before they leave their teens at college. (Twenty20 @eddie_rios)

Our oldest child originally planned to pursue a career in a field that was low paying when she headed off to a big 10 school. As we discussed her intended major, we had her research average salaries and the average cost of living in our hometown of New York City.

Our daughter had to rethink her choices based on financial considerations

The math did not work, so we had her reconsider her choices. Was she so passionate about that career that she would accept a lower-paying lifestyle that would make it nearly impossible to live comfortably where she wanted? Or was her desire to live near her family and friends in a comfortable lifestyle a bigger priority? 

Since she chose to stay near family, she started thinking about what she was good at, what she enjoyed, and what would lead to a higher-paying career. She wanted an occupation that would afford her the lifestyle that was important to her. 

She changed her major and found a job before graduating, which helped her achieve her short-term financial goals of buying her own home at 24 and being able to travel. 

The takeaway: Help your child discover the financial impact of the choices they will be making as emerging adults, and then let them work through how those choices impact their goals. 

Bobbi Rebell is a Certified Financial Planner, personal finance expert and author of “Launching Financial Grownups” (Wiley 2022)

5 financial topics to cover before move-in day

1. Share the cost of their education and how it is getting paid

Let them know what their college education costs. Show them the loan documents and bills, and be clear about what you are paying from savings, loans, grants, or scholarships and your earnings. Then discuss your expectations for their contributions. Make sure they know how much will be owed when they graduate and how you expect that to be paid. 

Make sure they fully understand the difference between money they are given, like scholarships, and money they will have to pay back. One of the biggest mistakes young people make is using more of their student loans than they need. It is perfectly ok to spend less than is being offered if your child already has what they need. There are countless stories of naive students using loans for ancillary items just because money is available. 

2. Discuss what it costs to live their life  

Show them roughly how much you have spent on them in the past year. This can include food costs, clothing, etc. Let them know what items are already paid for, such as student dining, and discuss who will pay for food costs outside of the pre-paid dining plan. 

Ask them for their thoughts on their spending habits. Do they feel they spend in a way that they will be able to afford when it is time to be a financial grownup? What if you weren’t (or aren’t) able to help them out financially? How would they adjust their lifestyle? Are there things that they can do to spend more thoughtfully? Do they spend differently when it is “their” money than when it is “your” money?

This is also a good way to discuss the earning potential in the career they are considering. Let them know that final decisions don’t have to be made (and you can pivot at any time), but they should be aware sooner rather than later if something they are considering won’t match their financial goals. 

3. Explain how credit cards work 

Make sure you don’t simply say no to credit cards. College can be a great place to establish a credit history that can help get loans in the future for everything from a car to a first home. If you put your child on your credit card, make sure there are spending limits and that your child understands how that works. Discuss what they are allowed to charge and who pays for it. One common misunderstanding is when a parent says a credit card is for emergencies. Be clear about what is an emergency-not “pizza because I was starving and the cafeteria was closed.”

Also, ensure they understand how a credit score is compiled, including the importance of paying the entire bill each month and paying on time. Explain the consequences of having a low credit score and give examples of things they might want to do in the future that can be impacted. It’s not just loans: future employers do sometimes look at potential employees’ credit. 

College can also be a great opportunity for your child to get their card, even without a credit history or income. Many card companies will market to your teen, so make sure they know to check in with you and discuss any offers they receive from credit card companies before they sign on. 

There are many great options out there, but as with all financial decisions, they must read and understand the fine print. Discuss with them what happens if, for example, they can’t pay the entire bill when it comes due, including whether you will be there to bail them out. Then stick to it!

4. Help them set up financial, organizational systems that work for them

Being financially organized is much easier when you use technology. There are apps for budgeting, tracking prices, paying bills, freelance work, investing, etc. Have them list the things they need, and then research the best apps for each one. Make sure they choose the apps-not you! This is their life. Then make sure they download them and put in the relevant information, so it is set up before they get thrown into the excitement of school. 

This is also a great way to have them gain confidence not just in themselves as independent financial grownups but also as members of your family and their community. Ask them to keep you informed about how their investments are doing, for example, or what apps are helping them find the best prices. Let them know how much you appreciate them helping you out and saving the family money as well. 

5. Talk to them about peer money pressure and financial empathy

Their new college friends will likely come from a range of economic backgrounds. Well-intentioned new friends may invite your child to a meal that is out of their budget-or your child may suspect that someone in the friend group with fewer financial resources can’t join in because of their budget limitations. 

Teach your teen to be inclusive and sensitive when planning activities and to be comfortable suggesting more affordable destinations rather than just going along with the first suggestion. Have them consider that very often, the “big spender” of the group is either on an unlimited budget from their parents or is heavily in debt to finance their VIP lifestyle.

Your child has to live within their means, and one of the best ways to be a friend is to make sure their friends are not saddled with unnecessary debt at this time in their life. This is a life skill that will serve them well in college and adulthood when expensive life milestones like birthday celebrations, engagements, weddings, first homes, and even kids become pricey events to celebrate with their friend groups and can be a big hit to their financial goals.

More Great Reading:

50 Things 18 Year Olds Can Do (Who Knew?)

About Bobbi Rebell

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