Graduating college is an exciting accomplishment in one’s personal and professional journey. As a proud parent of a member of the class of 2020, you may feel uncertain about how to best support your child following graduation during these historic times. These three steps will to help set your recent college graduate up for success as they organize their finances and evaluate their plans:
1. Consider supporting your child’s credit with a joint credit card.
It can be challenging for young adults to know how to build credit, which is essential to get a loan, buy a car and a number of other independence-building steps. To help, parents can open a joint credit card—with careful parameters on spending—to support building their children’s credit history.
2. Encourage your child to build a budget.
If they don’t have one already, young people must set a budget. Unfortunately, budget-building isn’t a skill that is frequently taught at school. Parents can begin the conversation by sharing how they budget each month with their children. A good way for young adults to start setting their own realistic budgets is by tracking all expenses for an entire month. This will help them discover how much they spend on entertainment, necessities, bills, debt, etc. This can help them identify areas where they can cut back on spending. In addition, this exercise will give them an idea of what their ideal income would be. There are also plenty of apps and programs that can help young adults track their spending and identify areas where they can save.
3. Support your child’s independence, even while living at home.
As a young adult, the transition to moving back home can be challenging if they are used to their own independence living on campus. There are ways to support their independence while setting them up for future success and avoiding potential headaches. As an example, some parents charge “rent,” but then save the money in a separate account to return when they move out. Parents and young adults often also discuss household arrangements such as chores, visitors, curfews, etc. While your child is home, you can learn more about your child’s personal and professional goals by listening to their plans.
In addition to the support you can offer your child, connecting them with a financial education course or consulting with a CFP® professional for more strategies can be valuable.
Find a CFP® professional in your area by visiting LetsMakeAPlan.org