In the height of the student loan debt crisis it is becoming more important than ever before to prepare our younger kids for the costs of their college futures. As with any aspect of finance teaching kids about money and debt at a young age can prevent them from becoming costly money managers. Here are a few tips for preparing yourselves and your kids for the costs of tuition:
Start Saving — it is never too early to start saving for college. In fact, saving just $30 a month from the time your child is born is enough to pay for a years tuition at an average institution. Obviously, that is far from covering it, but it is a good place to start. As your child gets older they can earn money through odd jobs and allowance that they can also put towards their college savings. The bottom line: every dollar saved is a dollar less borrowed.
Choosing A Career — while we all want our kids to do something they truly love, the fact remains that not all careers are as lucrative as others. So rather than steer your child away from a career of service or compassion, be realistic with your child about the salary levels and how they will need to take other measures to ensure they don’t over-borrow what they can afford to repay. For example, if your child has a passion for teaching, guide them into grant and scholarship programs that can help fund their degree.
Loans Are Not Income – if your child is going to need to borrow money to go to college teach them how to borrow responsibly. Kids should know beforehand that living off of student loans is a poor strategy for their financial future. Instead of borrowing the maximum amount each semester, they should take only what they need to cover tuition and books. The rest should be supplemented with income from a job or other sources.