Back-to-School Finances for Your Kids
7 realities all high school and college-age students need to know.
Many families are but a few weeks from sending their kids back to high school or off to college. As the school year begins so do the tuition bills, costs of room and board, fees, dues, and endless other expenses from books and class supplies to clothes, shoes, sports gear, transportation costs, money for entertainment, and on and on. The cost per family can be in the tens of thousands of dollars annually.
That kind of money means a lot of sacrifice on the part of most parents. What do your kids know about this part of your family finances? What should they know? What should you be sharing with them and teaching them about money?
We at Lenox believe kids need to know a lot more than they do about finances, budgeting, and money management, starting with what things cost and the impact those costs have on their parents and family overall.
Why? To better prepare the next generation for the real world. This includes young people learning to save, plan for major purchases, live within their means, avoid debt, make thoughtful financial decisions and, ultimately, leave home and be financially independent.
It’s no secret that recent years have seen a huge number of post-college-age kids move back home versus live on their own. A Pew Research study shows that one-third of young adults ages 25 to 29 in 2016 were living in multigenerational households, typically with their parents. Some did so because they were unable to find jobs or jobs that paid well enough to cover the costs of housing, health care, food, transportation, and the lifestyle they desired. Others moved back home so they could save money to get another degree.
Whatever the reason for not being able to make it on their own, the idea of kids moving back home has been a shift in how things are supposed to work. The trend itself emphasized the need for America’s youth to learn how to prepare for fluctuations in the economy and job market, to better understand what it takes to become financially self-reliant and the far-reaching impact their not being dependent can have on both them and their family. Case in point is the increasing number of parents who postponed retirement to help support their 20- and 30-something kids.
While some parents find it difficult to have the “money talk” with their kids, it has to be done, and sooner rather than later for the benefit of all. At Lenox, we work closely with families –– parents and kids –– to get everyone on the same page when it comes to income, expenses and attaining financial peace of mind family-wide. We speak from both personal and professional experience, and we make the learning fun. Following are seven of our favorite tips to share with the next generation.
“7 Realities All High School and College-Age Students Need to Know”
1. Out of love, your parents have a natural tendency to want to protect you and make you happy, including seeing that you have the things you want. The tough love it takes for them to say “no” to certain expenses can be a lot harder on them than on you.
2. Ask your parents to share with you how they go about budgeting household and family expenses. You will learn valuable lessons in terms of the thought process around financial planning as well as how to stretch a budget, the realities of making sacrifices, and the profound discipline to “learn to wait” for certain purchases.
3. Work for some or all of your “own money”, starting as young as early high school. You’ll think a lot harder about how you spend money when you’ve actually earned it. That in turn will drive you to comparison shop, to avoid impulse purchases and to be a savvier consumer for life. You’ll also experience the incomparable personal fulfillment that comes with work and being compensated for your efforts.
4. If you don’t already know how... learn how to open a checking account, write and pay a bill by check, balance a checkbook, read and track your bank account activity online, understand and compare bank fees, use a credit card and/or debit card, etc.
5. Learn about the compounding of money. Check out the charts online that show you the enormous power of this simple way to save when time is on your side. See how quickly your bank account will grow if you start to save now, even if it’s only a few dollars a week.
6. Discipline yourself when it comes to spending. Don’t go into debt and expect your parents, grandparents or a friend to bail you out. At some point, they won’t be around to do so. Build a budget and stick to it, even if it’s for the summer months. The Rule: When the money’s gone, it’s gone until you earn more. This lesson will be one that will reward you all through life.
7. Dive into self-learning about money and finances. There are endless books, podcasts and how-to videos on everything from simple budgeting, banking tips, and the best time of year to get the best deals on most anything, to investing for the novice, how the economy and global markets work, and more. Be the person in the know.
At Lenox, we work with families to help guide them in every aspect of their financial life –– from generational finances, to setting financial priorities, to eliminating debt, establishing budgets, career planning and coaching, funding education, retirement planning, and working through financial hurdles –– the entire realm of wealth creation, wealth building, and wealth management. In every instance, we start with you, not your portfolio to help you FUND A LIFE YOU LOVE™.
If you’re ready to discuss financial, business, career and life planning that will allow you to Fund a Life You Love®, we’d love to tell you more. Let’s talk. It’s your tomorrow. Call us for a complimentary 1-hour review. Call 513.618.7080 or visit www.lenoxwealth.com to Fund a Life You Love.
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This blog is limited to the dissemination of general information pertaining to its investment advisory/management services. This is not intended to be personalized investment advice. Please contact a Lenox adviser if you would like additional information.