Important Financial Discussions to Have With College-Bound Teens

No parent on earth truly believes their 18-year-old son or daughter is prepared for moving out of the house and entering the “real world.” High school counselors wax philosophical about the joy of launching confident graduates into college with a knapsack full of life skills, but in reality, moms and dads always wave goodbye to their newly-minted adult children with worried faces and bitten nails.

It’s important for parents to really prepare their children for college by giving them practical skills in addition to all that calculus and chemistry. Understanding finances is one of the most important skills you can impart to your kids.

Most high schoolers are lucky if they graduate with a few years of burger-flipping under their belt, let alone a working knowledge of taxes, student loans, and savings accounts. Therefore, the first step in teaching high schoolers about finances is to actually give them finances.

I’m not saying you should hand over your 401K and let them experiment, but it’s wise to allow your teens some form of monetary allowance so they can learn to spend and budget responsibly. Providing them with cash for holiday gifts is a good option. Christmas and birthday money can be a legitimate source of “income” for many teenagers. Plenty of companies also have prepaid credit cards for teens. This allows you to give your child some financial freedom and a working knowledge of credit, while still placing a limit on their level of irresponsibility.

Once your teenager is working with some kind of small savings, you can begin discussing a budget. Since most teens aren’t paying a portion of electricity or health insurance, you can show them how to set aside income for things like a church tithe, gas, new clothes, or weekend “fun” money.

In my opinion, no teenager should graduate high school without a general knowledge of taxes. Although companies like TurboTax provide easy guides to help beginners file their taxes, there’s no substitute for being taught by a real-life human. Sit down with your kids before April 15 and show them the reality of this facet of U.S. citizenship.

Lastly, teach your kids about debt. It’s almost as unavoidable as taxes, especially since you’ll soon be shipping them off to college, Land of the Never-Ending Student Loans. But just because your student will likely be accruing some debt during their college years doesn’t mean they have to accept debt as a part of every day life.

Not many people can buy a house or a secondary education outright – but you can teach your student the reward of buying a car with two years’ worth of savings. You can teach your kids how to live within their means rather than racking up thousands of dollars on their shiny gold MasterCard.

Sure, every student is going to make mistakes; every kid will go hog-wild when they have limitless freedom, no curfew and a new credit card. But you can still train your children to know a wise purchase from an unwise one – and that training will make all the difference when they’re out in the “real world.”