As college students across the country complete their final exams, purchase their caps and gowns, and plan their summer vacations, it’s unlikely that financial planning is at the top of their to-do lists.
So, parents, before your children walk across the stage at graduation, you’ll want to ensure they understand the basics of personal financial management.
Here are five tips to help your college graduate prepare for a better financial future:
Establish Good Credit:
Your son or daughter may already own a credit card, and if so, you want to make sure your child uses it correctly. Spending too much or making minimum monthly payments can lead to financial debt and bad credit, which may affect your child’s ability to obtain employment after graduation or borrow money in the future. It’s important that they understand their credit history and maintain a strong credit score.
Repay Student Loans:
For many students, it’s easy to forget about school loans. After all, they have finals, internships, and GPAs to occupy their minds. Nevertheless, your child will need to repay these loans. Most lenders offer flexible repayment plans, but depending on your son or daughter’s job situation, your child may find refinancing or loan consolidation a better solution to lower monthly payments and reduce interest rates.
Maintain a Monthly Budget:
No one likes to hear the word budget, especially recent college graduates. However, maintaining a monthly spending plan that records where their money is going will allow graduates to manage their personal finances and spending habits. In fact, there are numerous mobile apps available—including Mint, Wally, and Acorns—that track spending activity across multiple accounts to make budgeting fast and easy!
Save for the Unexpected:
If your college student does not have a personal savings account, now is the time to open one. Most independent financial planners recommend that a savings account cover at least 3-6 months of living expenses. This will allow your son or daughter to be prepared in case of an emergency and give you peace of mind after your child leaves the nest.
Discuss the Benefits of an Independent Financial Advisor:
It’s understandable that your college graduate may not be interested in financial planning services, especially at such a young age. However, having access to professional financial guidance will help your child make better investments for the future. It’s never too early to get your children thinking about financial management or consider having an independent financial advisor review their finances.
At Focus Financial, our financial planning firm offers invaluable resources to help you and your family make smart decisions about financial and investment planning.
To get started, visit our website to find a financial planning advisor near you!