As the new school year approaches, many parents are preparing to send their kids off to college. This transition can be both exciting and concerning, especially when it comes to managing finances. According to a survey by College Ave, 78% of college-aged students learn personal finance skills from their parents.

Discussing Financial Literacy

Parents can start by discussing their own financial experiences during college or their early career. This can help build a communication bridge and provide an opportunity for kids to learn from their parents’ mistakes. Instead of simply telling their children how to keep a budget, parents can show them by creating one together using tools like an expense planning spreadsheet.

Some important questions that parents can discuss with their children include identifying income sources, such as part-time jobs on campus, freelance or side gigs, internships, and scholarships. They can also come up with a list of fixed and variable expenses, including tuition, ride-sharing, and groceries. Understanding how student loans work, including interest rates and repayment plans, is also crucial.

Creating a Budget

Parents can encourage their kids to start with the 50/30/20 rule, allocating 50% of their income towards needs, 30% towards wants, and 20% towards savings or debt repayment. They can also explore and utilize tools like apps or spreadsheets to keep track of finances. Additionally, parents can encourage their kids to save at least $500 to $1,000 as an emergency fund for unexpected expenses.

By involving children in creating and maintaining a budget, parents can help them build a sense of responsibility and independence. This can also promote a sense of financial literacy, which is essential for making wise financial decisions in the future.

Original reporting: El Paso News (HLL/CB) — read the source article.