Are you a parent who gives financial assistance to a college-aged child? If so, you aren’t alone. More than 60 percent of young people between 19 and 22 received an average of $7,500 a year from their parents for such expenses as college tuition, rent, and transportation, according to a recent study by the University of Michigan.
This percentage stays high even after graduation: 59 percent of parents give money to their adult children even after they’ve finished school, Forbes notes.
How likely a parent is to assist a college-aged child is closely linked to income level. Eighty percent of parents in the Michigan study who were considered high-income said they help their children financially, but fewer than half of those considered low-income said they do.
Deciding whether to give your child money is more than a question; it’s an opportunity to encourage good financial habits. After all, college is a good time to learn about independence and problem solving – including financial problems.
Thankfully, there are ways to help your child financially without simply handing them money. You can encourage a student to apply for grants or get a part-time job, Forbes suggests. And rather than supplying money for groceries, consider taking your child grocery shopping. Not only can you be sure your money is going toward sensible items, but you can also teach them the art of stretching a dollar.
The best assistance you can give your child may simply be to instill good financial habits. Help them develop a budget and encourage him or her to open a savings account, Forbes says.
If you’re trusting a child with a credit card – either a personal one, or one linked to your credit card – check in with them now and then, to help him or her learn to keep spending under control. And if a child has trouble on that front, you’ll be in a good position to keep their debt under control.
Do you give money to a college-aged child? What rules do you use to ensure you’re fostering good financial habits?