Financial Considerations to PrepareYour Kids After Graduation As new college graduates begin to navigate life after school, their financial decisions will either help or hinder their goals. It’s important to you as a parent that your children are financially independent, so here’s how you can help your children transition from college to their career. Create a financial mission
Avoid becoming the bank of mom and dad. You have given your child your time, your love, and your money to set them up for success. So, what do you do if your now-adult-child asks for financial aid? • Focus on the essentials. Offer to help with only critical bills, such as health insurance or car insurance, so coverage is never lost. If you decide to help your children only in an emergency, make sure you stick by this. Explain to them in detail what you consider an emergency and avoid granting any assistance unless it constitutes what you both agreed upon originally. • Formalize the process. It’s in everyone’s interest to formalize the specifics of a loan, particularly for a large dollar amount. It may be awkward the first time, but leaving a loan open- ended reduces the likelihood you’ll be repaid, and that can create challenges down the road. • Weigh other options. If you are considering tapping into your retirement savings to help your child financially, look at every other available option first. While you may feel it necessary to pay for a child’s college education, pulling from retirement funds should be a last resort. Helping your college graduate become financially independent should pay dividends as they gain more experience. We hope you found these ideas helpful and are always happy to answer any questions you have on how to get the whole family involved. Please click here to contact us.
statement. A mission statement aligns goals to values. To adapt this concept to your child’s life, have an open conversation about what’s important to them. Try asking them what they think money is for, how to earn it, save it, and spend it. Ask them what their goals are and how they’d like to achieve those goals. Write it down and make sure they use it as a guide when they make monetary decisions. Establish smart spending habits. Take a run to the grocery store and have your child plan the process from
start to finish. That means planning the list, what you plan to cook, and how much you’ll need. You can model planning ahead and let them practice their budgeting skills! Then, at the grocery store, help them stick to what’s on the list. Be on the lookout for impulsive decisions as an opportunity to gently correct. You can also help them compare the cost of eating out versus a meal prepared at home. Exhibit delayed gratification. Most successful adults say they were taught to wait for things they wanted at a young age, which helps them avoid debt. Pick out an item or experience to save for while they are still in school. Create a chart using the number of days and amount of money it’ll take to afford it. Cross off the days as they pass while adding up the accumulated funds. Factor in setbacks due to any impulse purchases along the way.
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Personal Finance Quarterly | Spring 2022
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