Financially Preparing for Your High-Schooler to go to College
On this episode of A Wiser Retirement Podcast, Casey Smith and Missie Beach, CFP®, CDFA® discuss financially preparing for your high-schooler to go to college and the importance of being prepared.
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SUMMARY:
Financially Preparing for Your High-Schooler to go to College
Sending your child off to college is never easy. There are so many things to think, such as tuition costs, room and board, social costs and more. It’s important to start preparing early, so you are ready for the change. Often, your child is more independent and ready for this change than you think.
Practice Good Spending Habits
It’s really important to practice good spending habits with your child before they go off to college. Something you may want to try is getting a credit card for them while they’re still in high school. You can do this by making them an authorized user on your credit card so that they can start learning about credit. Making them an authorized user also helps them increase their FICO score. You should also make them aware of what can happen if they are irresponsible with their credit card.
Once they leave for college, they should set up their own line of credit. There are so many good options for new credit card users with small spending caps. This will help them not only build their credit score and learn about credit, but also how to be independent with their money.
Set Expectations
Each family is different, and everyone should have a conversation with their child about monetary expectations. You should come up with a plan on how much money you will give your child and for what, and what your child will need to have their own money for. Most kids don’t realized how expensive a social life can be, so having conversations about it beforehand can be really helpful. Another helpful tool is Venmo or Cash App. Almost everyone on college campuses use these systems to transfer money back and forth.
Student Loans
When it comes to picking a school, you need to decide how much you are willing to spend and go from there. As for costs, you can’t just look at the tuition price. You have to consider the price of room and board, parking fees, books, social costs, and more. They all add up.
A lot of families try to pay for tuition out of pocket, but something everyone should be doing is filling out the FAFSA. This is important in order to get any type of financial aid – scholarships or loans. Keep in mind that you have to fill out the FAFSA every year.
What is your ROI?
With any type of investment decision, it is important to think about your ROI. This is true when it comes to college as well. You need to think about what it is you want to do after college, and if the end justifies the means. If you’re not sure what you want to do after college, you shouldn’t be going to a really expensive school and getting into a lot of debt. A good rule of thumb is to look at the first year salary for your desired career, and you loans shouldn’t exceed that number.
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TIMESTAMPS:
0:00 Intro
0:55 Financially Preparing Your High-Schooler to go to College
1:50 Practice Good Spending Habits
5:35 Set Expectations
9:25 Student Loans
13:20 What is The ROI?
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