I was talking to a colleague the other day about her preparations for and excitement about sending her kids back to school. For me, with all my kids out of school, the energy and excitement of the season has morphed into a bit of disappointment at the increased traffic flow that accompanies a new school year.
However, if you are still in the excitement zone, don’t allow it to keep you from taking care of some of the details and opportunities that come with back-to-school season.
Here are five that might not be on your list of things to accomplish … yet:
1. Shop with Purpose
Back-to-school shopping for supplies or clothes offers up a unique opportunity to hone some basic financial skills. Your approach and involvement will depend on your child’s age, but the idea is to allow them to craft a spending plan, budget limited resources and begin to feel the reality of the type of spending tradeoffs we all make on a daily basis.
2. Dig into Debt
No, I’m not encouraging you to rack up a bunch of debt. However, this could be a good time to introduce credit cards to your young student. You’ll want to detail how they work and the potential dangers. For your teens, it could even mean adding them as an authorized user and teaching, coaching and observing their first foray into this mainstay of financial life. The goal: Use credit. Don’t abuse it.
3. Outfit Your Student with Insurance
Many students will be heading away from home for the first time. While it’s good to make sure they (and their stuff) are protected, it’s even better for them to understand how and why it’s happening. It might sound like this, “Yes, your personal belongings might be covered by our homeowners policy, but since we have a $2,000 deductible, a renters policy makes more sense. And oh, by the way, you’ll need a special endorsement to cover your computer and phone.”
Talk to your auto insurer about the best course of action for that coverage as well. If they are moving across state lines or purchasing their own car, changes to your coverage (or the addition of their own separate coverage) may be necessary or beneficial.
4. Start Building the Operational Framework
Here, I’m just talking about the basic financial tools and accounts your kids will need as they transition to adulthood. The earlier you get them spun up on using and taking advantage of checking, savings and credit lines, the easier it will be for them to transition to adult life. It still makes me smile when my kids talk about the various savings accounts they have set up for their specific savings goals.
5. It’s Never Too Early
The power of compounding is real. You’ve probably seen it within your own individual retirement account (IRA) or employer retirement plan. Have you brought your kids into your own “laboratory” and done a little show-and-tell? Yes, it’s true, “Little by little, a little can become a lot.”
Get them fired up about building for the future and, if possible, help them out. If you have teenagers working their first job, that could mean helping them set up a Roth IRA or matching contributions to savings accounts. A head start on saving and investing will be an effort that pays off in a big way.
Good luck as you embark on another year of school activities.
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