A Parent’s Guide to Teaching Financial Independence
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A Parent’s Guide to Teaching Financial Independence

The following is a special needs program update from College Living Experience | CLE | Choose Your Future. You may also click here to read the original article on the program’s website.

By Kelly Miller, Independent Living Skills Instructor

Pablo learning financial independenceNothing is more exciting to a young adult than the thought of finally being able to leave home and embrace a new independent life of their own. This excitement though, is often paired with uncertainty and worry – especially for parents. This time is filled with unanswered questions such as “Are they ready to make it on their own?”, “Did I give them the necessary tools to succeed?” Parents worry “will my young adult be financially responsible?” Here are a few quick tips to help prepare your student for the responsibilities of budgeting.

1. Start Early.

Good (and bad) habits begin early. Providing a budget helps kids and young adults learn how to spend responsibly and save for what they really want. Teaching-money-skills.com recommends that you provide younger kids with a weekly allowance and then transition them to a monthly one as they get older. This will help them understand the negative consequences of impulse spending before the consequences are too severe (i.e., not paying bills as an adult). It is also a good idea to get a prepaid debit card to improve their credit and get them acquainted with credit cards. This is also an easy way to track where they are spending their money.

2.Independent living with bills Calculate monthly bills.

Once your young adult’s living arrangements are determined, it is now possible to calculate the monthly expenses. In this amount include rent, electric, water, and cable/internet. Also include car, car insurance, and cell phone if applicable. If your student is still living at home or not quite to transition age, you can begin by focusing on the bills that they are responsible for. This may be as minimal as their cell phone bill or gas for the family car.

3. Determine spending budget.

Calculate an appropriate amount for groceries and “fun” money for a typical month. This amount will vary depending on the student’s diet, needs, and parent resources. Add this amount to the monthly bills determined in step 2. This will be their total monthly budget.

4. Be consistent.

Deposit this amount into the student’s bank account on the same date every month. This will help them learn to manage their spending in a monthly cycle, preparing them for pay cycles in future jobs and the routine of bill paying. It is recommended to make this deposit a few days before rent is due, ensuring that they will always have enough money for this most important expense.

5. Let them learn from their mistakes.

In the real world, naturally occurring consequences provide the best leaning experiences. This is true for budgeting as well. It is to be expected that there will be times that the student will overspend, spend impulsively, or just mismanage their money in general. Don’t rush in to help. Let them face the consequences and be responsible for addressing their mistakes. Sometimes this will mean late fees, cable disconnections, or ramen noodles for dinner every night – but these lessons they will not forget.

These steps will help any student learn the importance of staying on, and living within their budget. This will also create a foundation for budgeting that they can adjust as they get a job, begin a career, and become self-sufficient.

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The post A Parent’s Guide to Teaching Financial Independence appeared first on College Living Experience | CLE | Choose Your Future.