Most parents would do anything to help their children succeed in life. But when it comes to money, many parents are at a loss for what to do. A recent study showed that more than half of all parents feel unprepared to deal with the financial aspects of sending their kids to college. However, you can do a few things to make the process a little easier on yourself. Here are four tips for parents with college kids.
1. Get Tenant’s Insurance for Your Child’s Dorm or Apartment
Many parents are under the impression that their parent’s homeowners insurance policy covers their child’s college dorm or apartment. But this is not always the case. Most colleges and universities require students to have their own tenant’s insurance policy. The renters insurance for students protects your child in case of a fire, burglary, or other damage to their dorm or apartment. It also covers their personal belongings, which can be very expensive to replace if something happens.
If you’re unsure whether your homeowner’s insurance policy covers your child’s college housing, contact your agent and ask for clarification. If it doesn’t cover them, you may want to consider purchasing a tenant’s insurance policy for your child.
2. Open a College Savings Account For Your Child
It’s never too early to start saving for your child’s college education. The sooner you start, the more money you’ll have saved by the time you’re ready to go to college. One of the best ways to save for your child’s college education is to open a college savings account. There are many different college savings accounts available, so it’s important to research and find one that best suits your needs.
One of the most popular college savings accounts is the 529 Plan, which offers tax benefits and can be used for college tuition and expenses. However, other options exist, such as Coverdell Education Savings Accounts or UGMA/UTMA accounts.
3. Set a Budget and Stick to It
One of the biggest financial challenges for parents with college kids is managing their expenses while away at school. As a parent, it can be tempting to want to cover all of your child’s expenses, but this can quickly put a strain on your finances.
Instead, sit down with your child and create a budget for their expenses, including tuition, housing, books, food, transportation, and other necessary expenses. Discuss what expenses you will cover and what expenses they will be responsible for themselves. This can help them learn to manage their own money while ensuring they don’t overspend on their college expenses.
4. Plan Ahead for Student Loans
Many parents and students rely on student loans to pay for college. Before taking out any loans, understand the terms and repayment options available. It’s also important to borrow only what you need, as taking out too much in student loans can lead to a heavy burden after graduation.
If possible, try to save and pay for your child’s college expenses as much as possible before taking out any loans. This can significantly reduce the loan debt they will have after graduation.
Overall, it’s important to remember that resources are available to help with college expenses and plan ahead as much as possible. By following these tips, you can ensure that both you and your child have a smooth and successful experience during their time in higher education.
