Money Management 101: Tips for Your College Grad
One of the best things you as a parent can do to help your child is encourage him to automate his money as much as possible. There are a number of personal finance programs that can help your grad keep track of his finances, schedule bill payments and save automatically. He should have retirement savings automatically deducted from his paycheck. Help him create a system that allows him to easily access his financial information.
Pay off debt
Impress on your child that if he accumulates debt, he must pay if off as soon as possible. Interest saps income, provides nothing tangible in return and lines someone else's pockets. Have your child create a debt-reduction plan to get rid of his obligations as soon as possible.
Learn about financial planning
As a parent, you should use your financial experience to teach your child about how money works and how to get the best deals. Educate him about how credit and debt work and how investing can help grow his wealth. You don't need to be a financial expert, and your grad doesn't need to become one, but it is a good idea to understand the basics of how money works. Then he can put his knowledge to work.
Build your credit score
One of the most important aspects of financial health and money management is your credit score. Ensuring your child builds this number will help enable him to get the best possible deal to buy a home, car or insurance. A good credit score can save thousands of dollars. He can earn a good credit score by making wise credit decisions, such as buying one or two inexpensive things on a card and paying it off monthly. Make sure he keeps his debt low and makes payments on time.
If your child hasn't been saving regularly, now is the time to get him to start. Tell him to save for retirement and set money aside for an emergency fund. The younger he starts, the more time his money will have to benefit from compound interest. He will end up with much more in the end if he starts saving now.
Obtain good insurance coverage
Getting proper insurance coverage protects your child from the catastrophes that can drain finances. In addition to having an emergency fund, it is a good idea to set your child up with appropriate insurance coverage. Auto, homeowners/renters, life and health insurance are all important. Depending on your child's needs, it might be a good idea to consider disability and other types of insurance, too. It may seem strange, but insurance is an important aspect of money management.
Video: Money Management : Young Adults/College Students | Absolutely Adonis
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