Incoming college students are learning what it takes to be financially independent
Tom Smart, Deseret News
SALT LAKE CITY — Stephanie Barrett does not doubt that her son Andrew, 18, a recent high school grad, is mentally ready to leave the nest and move into the next phase of his life.
Financially, though, she's not so sure. And she's not just thinking about how much it costs to start a new household. She's also wondering if she and his dad, his teachers and other mentors have taught him all he needs to know to manage his own money well.
It's a question parents by the thousands are pondering as high school graduates head off to college and missions and jobs. Financial experts say the road to monetary independence is best conquered in baby steps. It takes practice and real-world experience.
"Usually what happens is a young person jumps in at all once and that gets him in trouble," said Will VanderToolen, director of counseling services for AAA Fair Credit Foundation. "Take little steps.,,, It's nice if they gradually, while at home, take over responsibility."
That may mean switching a car payment to the child's name alone, or making her pay for her own car insurance, he said. What's important is getting used to making a payment or two on time every month. "On time" is not necessarily a familiar concept to some teens, used to turning in homework late and having points docked. "In life, if you are not on time, it's going to damage your credit," VanderToolen said.
That raises the price of everything: higher interest rates, larger loan payments, more expensive insurance, even inability to rent an apartment. "You could get a great-paying job and still not be able to buy a car or move into the apartment you want."
With a year to go before her son Stewart graduates, Meredith Foster has recently started talking more about finances with him. This summer, he took the financial literacy class that Utah requires to graduate. "I think he has book knowledge of what he needs to know. The common sense knowledge of what you need to know, unfortunately, is one of those life lessons that some of us learn easier than others," she said.
"My best hope is that she understands that she doesn't spend more than she has," said Sheila Dixon of her daughter, Audrey, another recent graduate. "She hasn't really had to worry about paying for things on her own, so I am a little concerned about it."
Andrew Barrett has been asking about things he didn't learn in the finance class, like how to build a good credit rating. "They didn't have much debt and I grew up learning that debt is bad," he said. Now he has to learn to use at least some debt wisely. But his parents' example will stick with him, he said. "They talked about money as I was growing up."
His friend Tad Fullmer admits that he's ready to take over his own finances in theory, but handling money well will "just come with time." This summer, he got a job, opened a debit account and is going over finances with his parents. He plans to go to college in the fall, then on a mission for the LDS Church, then back to college. He hopes to put most of the money he earns into savings, since he's living at home. "The most worrisome thing is if the paycheck will cover what I'm paying for."
Experts suggest setting up a system to organize bills so you never miss a payment. Since kids tend to love technology, electronic prompts in Google calendar or on a cell phone may work best.
Debt and credit are subjects that scare parents as they send their children out into the world.
Carla Hughes' hopes and worries for daughter Karina's future are identical: "Debt and debt and pretty much debt. I hope she avoids that.... She might go out and spend more at the grocery store than she should, but she's not going to go out and buy a new dress because she's in need of a pick-me-up. Still, she might nickel and dime herself to death." Most kids, she noted, have "no idea how fast it adds up."