How do I prepare my children for the financial responsibilities of college?

Hello, my name is Ron Blue and I think one of the biggest mistakes that I’ve seen parents make over the years is they don’t prepare their children to have the financial apron strings “cut.” So, when they go to college, all of a sudden, they are going to be confronted with credit card applications. They are going to be confronted in a much, much bigger way even with peer influence, and you are not there to bring your own influence to bear.

So, I think you begin preparing your children to go to college when they are about eight years old, when you begin teaching them responsibility. You begin teaching them how to plan and manage the money and how to spend wisely.

When they’re in high school, I believe that they should have a credit card so that they understand that a credit card can be used for convenience but never, ever for borrowing. You really can’t live in today’s culture and society without having a credit card. So, if your children don’t learn how to manage a credit card before they go to college, they’re going to learn, but it’s probably going to be a very, very painful lesson.

I believe that you begin cutting those apron strings from the time that you start teaching them responsibility so that there’s a natural transition when they go to college. You may have a conversation about the things that they are going to do and how they are going to spend money in college. You may discuss how much you’re going to give them to spend and how much they’re going to have to earn, for example. What is their budget for college? But, this shouldn’t be the first conversation that you have when it comes to money and money management. It should be just a continuation, and now there’s another stage of life.

Judy and I had a practice that when our children reached the age of eighteen. We took them out (we took them out always for dinner on their birthdays,) but at age eighteen, we did do a formal cutting of the apron strings. We said, “You know what? You’re now on your own. We’re here to support you. We’re here to encourage you. We’re here if you have a need. But, we’re going to trust you to make the decisions. We’re not going to tell you when to come in; we’re not going to tell you how to spend money; we’re not going to tell you any of these things. They are now your responsibility.” So, we had a formal conversation on that; but it needed to be and should be the continuation of conversations that began many years before.

Click here for the May 29, 2009 Blog Entry