Schooling College Students about Financial Responsibility

Classrooms at universities and colleges across the nation will open for fall semester in the next couple of months. You might have a child, grandchild, niece or nephew who is all set to spend their semester studying, socializing, and living on their own. You have prepared them for college life by teaching them how to grocery shop, prepare simple meals, and do laundry. Often, however, college students head to school with little knowledge about making a budget and managing money.

A National Student Financial Wellness Study, the first of its kind released in 2015 by Ohio State University, showed college students’ biggest worries were not exams or terrible roommates. Their biggest worries revolved around money. A little more than 72% of the students surveyed said they felt stressed about personal finances, monthly expenses, or whether they would be able to pay for college at all.

A 2016 survey found that among college students surveyed, 71% said they learned about money management from their parents. So take a few minutes and sit down with your college student today and share these tips. Your advice could help them not only during their college days but throughout their lives.

Financial Advice for Your College-Bound Students

  1. Help your college student set up necessary accounts. College students likely will need at least checking and savings accounts. Start teaching them good habits now and ask them to research banking institutions that would be convenient for them to get to from campus or their residence.
  2. Establish clear financial responsibilities. Determine who will be responsible for which expenses. If you are planning to take care of bills such as auto and health insurance, or cell service, be clear with your student that he or she is responsible for living expenses including rent, utilities, groceries, and other household costs.
  3. Wean them off your bank accounts. It might be tempting to continue paying your child’s, grandchild’s or niece’s or nephew’s expenses to help them get a strong start, but that does not teach them to be self-sufficient; it is likely to make them more dependent on you.
  4. Decide whether a credit card is appropriate. Credit cards often give college students the most trouble. Credit cards are an effective way to establish early credit history, but it is common for students to run up balances without fully understanding how credit cards work. If your student gets a credit card, be sure they understand how credit cards work and how important it is to pay off the balance every month.
  5. Will your college-bound student work during college? Holding down a part-time job while going to school has plenty of advantages. It helps cover living expenses or it gives them a chunk of money to save each month. It also makes it easier for them to manage money and gain valuable work experience. And finally, it looks great on their resume after they graduate and go looking for a job in their field.

It is never too late to sit down with your college-bound child, grandchild, niece or nephew and talk frankly with them about the importance of being financially responsible.

We are here to help you each step of the way, so please let us know if you have any questions about these tips or the bigger strategies that are helping guide you to your financial future.

 

5 Critical Financial Issues in Remarriages

Many Americans are in their second and third marriages. In fact, statistics from a 2012 book, The Remarriage Blueprint, suggest that nearly 40 percent of new marriages include at least one previously married spouse. Remarrying later in life can produce a number of complex financial, legal, and emotional matters that should be addressed as soon as possible. If you or someone you love is part of a blended family, we urge you to think about these important issues.

Be candid about your financial situation. Couples who are remarrying frequently have significant financial baggage. Being open and honest with each other about assets, debts, and obligations from a previous marriage can help avoid problems later on.

Consider the following questions:

  • What financial obligations are you bringing to the marriage?
  • How will you split living expenses and contribute to savings?
  • Do you plan to pool your finances?
  • Where will you live and who will own the house?
  • Who is on the mortgage?
  • How will your marriage affect college financial aid for your children?
  • What will you do if you need to financially support an adult child or elderly parent?

It’s very important to be able to have these conversations early and often in your marriage. If you find that you’re not on the same page or are worried about bringing up complicated issues, ask your financial advisor to help mediate your discussion and provide a neutral perspective.

Update life insurance, medical directives, and beneficiary designations. It’s unbelievably common for couples to forget to update important documents when they remarry. If you or your spouse dies without changing beneficiaries on a retirement account or life insurance policy, a significant part of the estate could go directly to a previous spouse, with no legal recourse. If you and your spouse have living wills, healthcare powers of attorney, or medical directives (and you should), review them with your attorney to make sure that these documents reflect your current wishes. If you don’t currently have an attorney, we can introduce you to one from our professional network.

Think about how remarriage affects your retirement planning. Some divorce settlements require retirement benefits to be split with an ex-spouse, which could reduce your income in retirement. In the event of your death, your current spouse might have to split survivor benefits with your ex-partner. Social Security benefits can also be affected. For example, if you are entitled to spousal or survivor’s Social Security benefits from a previous marriage, getting remarried might affect how much you are entitled to collect. Discuss these issues with your spouse and financial advisor to make sure that your retirement takes into consideration your change in financial circumstances.

Consider drafting a prenuptial (or postnuptial) agreement. While most Americans get married without a prenup, we believe that they are essential in a remarriage situation. In many cases, one or both spouses will have children from a previous marriage or have significant debts and assets. When developed by an experienced attorney, a financial agreement can help you protect yourselves and your heirs from the financial fallout of a divorce.

Discuss estate planning with your investment advisor and attorney. Estate planning can be emotionally and logistically complex in blended families, and it’s important to make sure that you and your spouse update your estate plans. It’s essential to discuss your estate plans if you want to make sure your children inherit rather than your current spouse or your spouse’s children.

Conclusions

Remarrying later in life is wonderful, but a new marriage can introduce many complex financial considerations. We strongly recommend discussing these issues with your spouse as early as possible to ensure that your financial health is protected and to help lay the groundwork for future conversations about money.

It’s also a good idea to speak with your investment advisor and attorney so that they can help you understand how your finances and legal situation will be affected by your marriage. If you have any questions about marital finances or any other issues surrounding blended families, please give us a call. We’re always happy to be a resource to you and those you love.