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3 Money Talks to Have With Your Kids Before They Head to College

By Christy Bieber – Updated Feb 6, 2020 at 1:55PM

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Are your kids starting college for the first time? Be sure to have these important talks about their finances.

For most parents, it's a major milestone when kids head off to college for the first time. College is the first chance your kids have to live as independent adults, which is likely a bittersweet experience for moms and dads after 18 years of being responsible for providing supervision, guidance, and care.

But just because your kids are headed off on one of their first big life adventures on their own doesn't necessarily mean your job is done. Chances are good your children will still need advice on a whole host of issues. And some of the most important advice they'll need likely focuses on learning to manage finances responsibly. 

A family sitting on a couch while laughing and eating pizza.

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Money mistakes your kids make in college could affect their futures. So as a parent, you probably want to help your kids avoid big financial errors and make responsible choices. To that end, there are three big money talks you should definitely have with your offspring. 

1. The student loan talk

Today, it's very common for kids to take out student loans because parents simply cannot afford to fully fund the cost of a college education.

If your children are borrowing, be sure to talk with them about the implications of this decision. While student loan debt is generally considered good debt, it can still be hard for young people to pay back -- and your kids need to know this. 

It's essential that you explain to your children the possible long-term consequences of borrowing, including the fact they're likely committing to a decade or more of payments and their loans may mean they need to delay milestones such as buying a home. 

Make sure your kids know to compare rates on student loans so they can get the most affordable funding possible. You should talk with your kids about options they have to borrow less, such as working while in school or searching for scholarships. And stress how important it is to not borrow for anything unnecessary, such as big nights out or vacations.

2. The credit card talk

A consumer protection law called the CARD Act has made it harder for college kids to get a credit card -- but it is still possible for some young people to get student cards on their own. Many parents also decide to send their kids off to college with a credit card or will cosign for a card with their children to help them start to build credit.

While credit cards are an important and helpful tool for your children and they can assist towards developing a positive credit score, credit card debt can be extremely dangerous. College kids who charge too much will likely struggle to repay what they owe and incur high interest costs. This could lead to graduating with lots of high interest debt that has to be paid back. 

If your kids use cards irresponsibly and don't pay off the bills on time, this could also cause them to leave college with a damaged credit score. Future financial transactions, such as buying a home or getting an auto loan, would then be impossible or much more expensive.

It's imperative you talk to your kids about the risks of credit and the importance of using it responsibly. Stress that while they may want a credit card, they should only use it to make small purchases and pay the card off in full each month. 

3. The budgeting talk

Whether you're supporting your kids through college or they'll be getting funds from student loans, it's important your college-aged child know how to make his or her money last. This is especially important if your child gets a lump sum payment from student loan funds at the beginning of the year. 

Have a conversation with your kids about how they can budget their money to make sure they aren't overspending and so they have the funds they need for the essentials. If your child is going to be living in an off-campus apartment, make sure they think about necessities they may not have had to pay for before, such as utility costs. 

Don't let your kids leave for college unprepared

By talking about these key money issues with your children, you can help them avoid getting into financial troubles in college that could affect their long-term future. One day your kids will thank you for helping them make the right decisions so that they were able to start their independent lives with a focus on fiscal responsibility. 


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