Marino on Money: June 25
College isn’t all about partying. It’s about getting an education and learning some important life lessons. Financial planner Ross Marino has more advice on teaching college students to become financially responsible.
I’ve been talking about helping your child prepare financially for college in the fall. With the cost of college growing three times faster than household income, managing your money is more important than ever.
First, parents must help their children understand the cumulative effect of financial decisions.
Next, involve them in the budget process. They must learn to look at how much life costs, and determine what they can afford to do.
Finally, they must protect their credit as if it’s a big gold nugget. Breaking contracts and not paying your bills will lead to bad credit. Bad credit makes life harder and more expensive.
Unfortunately, many children consistently make poor financial decisions. Why is that? Since I’m a parent, I need to look in the mirror first. Am I responsible for some of children’s habits and behaviors? Yes I am, at least the good ones.
Unfortunately, pain is what causes us to change behavior. Sometimes people must suffer the consequences of poor financial decisions before they change. This may be the area a parent can help their child the most.
When your children make poor financial decisions, don’t immediately bail them out. I see so many parents who are enablers. Their children are irresponsible with money, and the parents don’t understand why.
Here is a suggestion. Quit bailing them out! Let them suffer the consequences of bad decisions, and maybe they will make better ones in the future. In many cases, bailing out your children hurts them because they don’t grow and learn.
How do you know if you’re an enabler? Here’s one test. How many times have you ‘loaned’ your children money? How many times have they paid you back? If they don’t pay back your loans, it’s not a shock they don’t want to pay back their other loans either.
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