Helping Your College Graduate Understand Their Financial Future

College students learn in great depth about their chosen subject, with experts to teach them, fascinating lectures and events they attend all throughout their course. Yet increasingly, the disconnection between normal life in the real world is being swept under the rug. Students may be able to understand complex topics of all kinds around the world, and yet still lack the basic common sense and knowledge of how the world runs. One of the key factors that are often left out of their daily lives is the importance of understanding finances. Apart from the finances they have to deal with immediately, like paying for their college tuition, books and food, they don’t get taught the long term financial options they have. Given how important monetary and fiscal skills are to navigate yourself through the lift, it’s crucial that every parent set their college graduate up to be stable with money.

College Graduate Photo

Image by – Will Folsem

What is their goal

Money isn’t just money; it’s a form of value that has is its own entity capable of shifting your life from poverty to unimaginably comfortable living, with little worry or fuss. It’s important to tell them that in essence, money isn’t power, it's the key to opening doors in life because it gives you options. When you sit them down and talk to them about their fiscal future, talk about setting a clear goal. Where do they want to be in 5 or 10 years time? Most people will say, they want to own their a home, or perhaps be further up the ladder in their career. But truthfully, where you are with your finances isn’t a sideshow. Having a home is the go-to thing, but purely having a property under your name, does not secure it. Cultivating a well of wealth will allow you to cross the bridge and sustain purchases you make. Other things can get in the way of plans to own a home or car, so try to forge a strong and stable base from which all other financial moves, take place.

Photo by – Sebastian Appelt

Start saving

In the midst of death, we are in life as the old Latin phrase goes. Saving for tomorrow unfortunately takes second place in many young minds, because they want to spend now. Graduates may want to move to a new city and buy or rent an apartment if they get accepted by a firm or company to join their team full time. Getting swept up in the world wind of your life changing drastically can lead to some very ill choices when it comes to money. Talk to you children about setting up a savings account. Many different styles are available, and for most beginners, the 0-2% interest rate bracket is going to be the most attractive. Many banks around the world, call this the entry or basic savings account, where all you have to do is agree to a set lowest and highest amount of money, which must be put into the account every month. Some banks may allow you to set your limit higher along with maybe lowering the interest rate to keep it in line with the basic model. However, most will set their own figures as per company policy.

The standard practice of a savings account is that for an agreed period, you cannot touch the money in it. This means you cannot withdraw any money from the savings account or risk it being terminated. It’s easy to see why most graduates don’t want to be pinned down like this because they’re debt with their student loans, need to pay rent, buy groceries and generally, run their life to a tight threshold. However, even a small percentage, being tucked away every month, will eventually become routine. It will also teach them about patience and reward. Their budget might get a much-needed kick of discipline, as well the savings account becoming a base for future purchases like a house. It can also act as their emergency fund, for financial problems that need immediate attention, for example, health care bills, natural disaster relief or for court fees.

Credit – Ken Teegardin

Avoid being care free

It sounds contrary to the human spirit almost, but being carefree is not being risk-free. Teach you newly graduated child that, going out for beers and to sporting events are no longer regular occurrences, but part of their luxury expenditure. The importance of setting a budget isn’t merely so they can understand how much their total living costs are, but to drill home the fact that, they must have financial priorities. First and foremost, their bills of the place they are living in, take absolute precedence. Advice graduates to set aside the money they earn, already in their mind before they get a month’s salary. That way, they have already cut out a portion which is deemed to be in another category or tier of usable money.

Don’t take out loans for cars, which will put a strain on their budget, or impact their ability to meet the obligations agreed to for the savings account. Although this may change their life easier when it comes to getting to and fro from their job, but the ethic of hard work should overtake this need. Advise them to plan their lifestyle such that, if their job is far from their home, they must get up early to get the local public transport, and arrive on time. Going out into the world of work, without wanting to make sacrifices, is not a sufficient reason to become reckless with expenses.

What if they’re in trouble

It’s happened to us all. One day, we realized that we had more money going out than in, which was leading to a crisis point. Paycheck loans aren't going anywhere, and it’s clear to see why. They can come in handy when a bill or some form or outward payment is getting too much to bear. Although payday loans can help people with bad credit, they’re not exclusive as all that’s needed is a chequing account and an income. If you have a deadline to meet, or a problem could get worse, such as an increase in interest rate or a fine for late payment, a payday loan can halt this. However, be aware that your next paycheck is immediately used to pay off the loan as the fees to renew the loan can mount up to eventually become more than the loan itself.

If your son or daughter who has just recently graduated is in financial trouble, this is where they see will start to see the importance of a savings account. They can opt for credit cards that have set limits together with interest rates which they can use sparingly to get themselves out of a hole. However, even these actions must not be out of desperation, because the first mode of conduct should be to alter their lifestyle. Take on overtime, work harder and longer than their coworkers to earn more money. Not only will they learn the error of their mistakes and the hardship that follows foolish and uncalculated financial mistakes, but they may also catch the attention of their boss for working hard.

Cartoon houses that look like arrows

Source – OpenClipart-Vectors

Planning for a family

There will come a time when they want to start their own family and start to well and truly, settle down. They’ll want their own home with land, such as a garden and in a certain location with the correct environment to raise a child. It’s wise to figure out what kind of governmental benefits they might be eligible for when setting up a family. Although the state should have no say in your their financial planning, they may be able to register and qualify for certain claims that can support the household while one of the working parents is pregnant. Buying a house is one of the biggest ever purchases in anyone’s life. If you have the relevant life experience, you can impart wisdom to your graduate child, about applying for a mortgage. Unlike other forms of loans, this is a larger form, with very serious penalties for failing to meet the contract. Explore every avenue that’s available to them, and more importantly, study the interest rates of different banks and companies. The budget of the couple and the potential costs of the newborn should be directly correlated to the mortgage amount and interest rate. It will more than likely, take years perhaps decades to pay off the mortgage, so treat this with the utmost seriousness.  

There are many routes of finance graduates can go on. Although they may not be taught this at college, the importance of fiscal planning is a large and important part of life. One thing you cannot buy is discipline and determination. Those who are prepared to go through hardship, have the strong willpower to survive rough living conditions while saving up for a brighter future. Learning the vast options is something that should be done as part of their hobbies and interests. Running blindly into the world of work, and hoping to pay off short term purchases quickly, can turn into a prolonged nightmare. Always save, because the money that you do will multiply on its own, and sit, ready to aid you in times of need.

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