How to talk to your college kid about money

When it comes to talking to a young adult about money, there’s a sweet spot. You want to give them facts without talking down to them, and you want to help them understand money management without lecturing. In short, you want to respect that they’re old enough and mature enough for college while instilling wisdom they can carry throughout life. 

Tone matters

If you’ve never discussed financial matters with your child, the first big money talk could be a bit uncomfortable. After all, the two of you might have very different ideas about how to manage money.

The important thing is to keep your tone light and the conversation casual. There’s no reason to make this feel like a class lecture or that you’re trying to fix something that’s broken. 

These conversations are meant to prepare your kid for adulthood, beginning with their college experience. Keeping things relaxed and enjoyable will make the whole project easier. 

Once you decide to hold the conversations, start thinking about subjects to cover. Here are some ideas to get started:

“Here’s what you can expect financially”

The best time to speak with your child about how much you plan to contribute toward college is as early as possible. It wouldn’t make sense to have this money talk with a 5th-grader, but by the time your child starts high school you should introduce the subject. That way, they can start coming up with a game plan.

Depending on your contribution, they can decide whether to aim for scholarships, take out student loans, work while attending school, or live at home and commute.

The earlier you have that first money conversation, the more time your child has to create an action plan that makes higher education possible. 

“Debt can be hard to shake”

Chances are, your young adult may receive credit card offers starting in their freshman year. It may even happen at orientation or on move-in day. You want to emphasize how tough it can be to get rid of revolving debt once the card has been used. If they’re going to have a credit card in their name, make sure they understand it’s only for use in emergencies. 

If you haven’t already, discuss credit scores with your child. Help them connect the dots between how someone manages credit and their credit report. Their credit score can impact everything from whether they’re able to rent an apartment to whether they can buy a car. Once they understand that, the potential consequences of easy credit will become clearer.

“Remember needs vs wants”

If you’ve never talked to your college-bound child about needs vs. wants, the subject could lead to a few eye rolls. After all, your child probably thinks they do know the difference. Still, this is an important conversation. It could be as easy as saying, “Before you spend, ask yourself if it’s something you need or if you’re buying something you can do without.” 

“Life’s easier with a realistic budget”

If your kid has never had a budget, help them come up with one that’s easy to follow. Whether it’s a zero-based plan or envelope budgeting, make sure they understand how sticking to their written plan can prevent bank overdrafts and other negative financial events. It’s all about avoiding stress so they can focus on their education.

“Be a smart shopper’

Encourage your child to become a savvy shopper when it comes to buying school supplies and daily necessities. That may mean finding the lowest price on everyday purchases with a price-comparison app, looking for coupons, thrifting, or shopping at Dollar Tree or Five Below for paper, pens, snacks, and so on.

“Don’t try to match the crowd’s spending”

It’s a fact of life that some students have more money than others, and sometimes, those who have more will be able to do things your child can’t afford. A good time to discuss this is before your student-to-be begins college. Whether they plan to live on campus or commute from home, learning to live within their means—no matter what other people do—is an important lesson, and there’s nobody better than you to teach them.

Your adult child is old enough to hear what you’ve learned from personal experience, whether that experience has been positive or negative. Let’s say you went through a period of keeping up with the Joneses. Sharing the impact it had on you and your bank account could help them avoid the same mistake or motivate them to make better decisions. 

Watching an adult child go off to college for the first time can be an emotionally tender experience for both of you. The best you can do as a parent is to send them off armed with the knowledge they need to look out for themselves. It also helps if they know they can call you anytime they’ve got a question or just want to chat.