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.

 

Do Your Children Understand Money?

Are the young people in your life financially literate? By helping them learn about money, you give them an important head start on important life skills like developing good savings behavior, living within their means, and avoiding many common financial pitfalls.

Unfortunately, many young Americans are not learning the right financial lessons. Research shows that 46% of teens don’t know how to create a budget and 55% would like to know more about managing money. We can’t rely on schools to teach financial skills because many of the practical classes we took no longer exist. Too many kids reach adulthood without knowing how to budget or make important financial decisions.

Based on our experience working with young people, here are some recommendations for helping kids develop the right financial behaviors:

Start early. If your kids are old enough to ask for things, they are old enough to start learning about money. Teach young kids that we have to save for the things we want by helping them choose a toy and then saving to buy it. Use an allowance to teach budgeting skills and incentivize chores with older children. Give kids an age-appropriate allowance – Mint.com has a great piece on average allowances by age. Some parents choose to tie an allowance to specific chores, while others prefer to treat chores as an expected family contribution that is separate from an allowance.

Set financial expectations and be honest about money. Until kids start earning a living and being responsible for their own expenses, it’s easy for them to believe that money grows on trees. Involve kids in everyday shopping decisions so that they understand your thought process behind common financial decisions and learn your values about money. Depending on their age level and maturity, you can also ask for their input when making financial choices. Give them a budget for back-to-school shopping and help them prioritize their spending so that they learn about living within their means.

Expect kids to contribute to their financial future. If your kids have an allowance or receive money on birthdays or holidays, require them to set aside a certain amount for the future.

We recommend using the three-bucket approach: one third of every dollar goes to long-term savings, one third goes to charity, and one third is pocket money. Long-term savings can be used toward education expenses or to pay for a major purchase like a car. By teaching your kids how to allocate money, you help them establish critical saving while teaching them about your values.

Teach kids about debt. It’s very easy for young adults to get in over their heads with credit card debt or student loans. Teach your kids how debt works so that they can evaluate offers and avoid predatory lending. If possible, help your kids establish their credit through a secured credit card or low-limit card that they must pay off each month so that they learn how to manage debt responsibly.

If you’d like help teaching your children, grandchildren, or other young people about money, please reach out to us. As financial professionals, we know the difference financial education can make in someone’s life, and we want to offer ourselves as a resource to you and your family. Together, we can sit down and come up with strategies to make sure the next generation is fully prepared to navigate their finances and make smart decisions about money. We can help you:

  • Establish smart savings behaviors in young children
  • Create college savings strategies
  • Prepare teens for young adulthood
  • Develop strategies for boomerang kids

If we can be of service to your loved ones, please contact us. We’re always happy to listen and help.

It’s Time To Review Your IRA Beneficiaries

Courtesy of Freedigitalphotos.net/Stuart Miles

Courtesy of Freedigitalphotos.net/Stuart Miles

As of January 31, 2014, all clients who have an IRA with Hixon Zuercher Capital Management should have received a 2013 Form 5498 in the mail. This form presents all 2013 IRA contribution information, fair market value of the IRA portfolio as of December 31, 2013, as well as the IRA beneficiary summary statement. It is wise to review your beneficiaries every year at this time to be certain you still desire the same primary and contingent beneficiary(s). If you wish to change your beneficiary(s), or are having trouble locating them on this form, please contact Hixon Zuercher Capital Management so we may assist you in accordance with your need.

Don’t miss Hixon Zuercher 2014 State of the Markets Webinar on Feb 13, 2014 12:00 PM EST at:

https://attendee.gotowebinar.com/register/6278631763793061633

Since March 2009, we’ve been reaping the benefits of a bull market, with the S&P 500 returning over 150%. At this point, many investors are wondering if the growth can continue. Facing the end of quantitative easing, another debt ceiling debate, and a number of geopolitical concerns, we think now is a good time to share our viewpoints with you. Please join us as we analyze what the indicators are pointing to, and discuss what could be in store for 2014. Your family and friends are also encouraged to attend.

After registering, you will receive a confirmation email containing information about joining the webinar.

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