First steps to independent finance

First steps to independent finance
10 March 2013

THE rite of passage from teenager to young adult is such a crucial one for so many reasons – not least of those, the ability to ‘make it on your own’ and take your first few steps into fully fledged independence as an adult. And, take it from someone who stumbled rather than stepped, a little preparation goes a long way. When I chose my university course and hop-skipped my way through applications I could not envisage myself, a week into university life, crying about how much I wanted to come home.  

And yet, there I was. “It’s too hard, I hate it here!” I pleaded. But give it another week? Phone calls home had all but ceased, and I was out with my friends having a great time – spending all my money. Another two months, and the phone calls had begun again. This time the pleas were different: “Help!! I have nothing in my bank account! Can you transfer me some money?! It’s an EMERGENCY!” The emergency was that I was out buying Christmas presents and hadn’t thought to budget to leave myself enough money for my family. So essentially my parents bought their own Christmas presents that year. Yep. Student life.

So, using my own experience as a cautionary tale, here are some simple actions you can take to ease the transition for your soon-to-be college student from home life to being a self-sufficient young adult! Read with care, sit down together and discuss, and keep your eye out for more on cashy’s Student Week this week on the site!

Agree to a monthly/weekly budget and design the plan together!

Not only does this give your future graduate the opportunity to be creative and have control over their lifestyle, it also really brings home the reality of how much it takes to live. Planning with a parent allows for transparency and means you can both keep a copy and agree a ‘check in’ time every month to make sure everything is running to plan! This means all ‘Christmas present disasters’ are successfully averted!

Set up a student account – WITHOUT a credit card

… But with an overdraft! An overdraft is usually interest-free on student accounts and serves as a ‘safety net’ for emergency situations to put your mind at rest. Often banks will try to sell you a credit card to partner the account – at least for me, this has never been necessary.  Also – another mistake I made – make sure to check the terms of the overdraft AFTER graduation – when will the bank start charging interest on borrowed money? How much can you borrow and for how long? I went with the bank my parents had banked with historically and the payment scheme on borrowed money for my graduate account has put a little unnecessary pressure on me.

If you are sending money as an allowance, set a monthly date to deposit

This way, money acts like a salary – once the money has run out for the month, it’s gone! This will help with discipline and keeping your budget plan in place. It’s not there to pressure, merely to help with making responsible choices.

Part-time job = more financial freedom

If there are any discrepancies surrounding your budget plan, encourage your child to look into working part-time. This will open up more disposable income for them, look great on their CV and more often than not can fit easily within a university schedule. A word to the wise – work all the extra hours you can in your first and second year – third year is a time you’re going to want to really focus solely on your work and exams!

Be present, but only as a back-up

My parents were wonderful to me when I was starting out as a student but, if I’m completely honest with myself? They gave me a lot more support than I should have had. I wasn’t responsible with my money and the change from university life to working life was a really difficult one. You can make that change easier for your child by being supportive emotionally, but not confusing this for financial support. This is a really great time to encourage your child to take matters into their own hands and become financially independent. Let them experience this – even when it sucks!

 

Pic credit: freedigitalphotos.net


DO YOU have a child starting at university soon? Will you be planning a budget with them? Are you concerned about them managing financially? Ask Tamira a question or tell cashy your experience below!

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