The College Board states that average college tuition and fees cost between $9,970 and $34,740, depending on whether your child attends a state or private college. While parents typically cover 23% of college costs, the nation’s teens are contributing $2,600, or 11% of the bill. One-third of students use their income to help cover their college costs and one quarter use their savings. Therefore, as you start to prepare your teenager for college, it’s essential they know how to manage their cash as you help your teen save for college.
Open up two accounts
Even teens need to be able to access their cash as and when they wish to do so, which is why a checking account is the ideal first account for most youngsters. However, having a savings account alongside it is recommended as it will encourage your teen to save money at the same time. Cash required for day to day purchases should be held in a checking account which allows instant access and as many withdrawals as your teenager requires. Whereas, it’s best to choose a savings account with a high-interest rate and which limits or prohibits regular withdrawals. 83% of teenagers aged between 13 and 17 years of age actively save their money, so with the right guidance and support from you, your teen will be well on the road to covering their share of his or her’s college bill.
Start their savings for them
The ‘How America Saves for College’ report reveals that 6 in 10 parents are saving for their child’s college fees. While you might prefer to keep the cash you’ve spent years saving in your own savings account, it’s worth transferring a small portion of it into your teen’s account to get their savings off the ground. According to U.S News, saving money can become addictive as you see the figure grow. Therefore, when your teen sees cash in their account, they will be more inclined to add to it.
Be a good role model
Saving money isn’t something that comes naturally to some people. And, with 34% of U.S adults admitting that they have no savings for an emergency situation, showing your teen how it’s done is the simplest way to encourage them to get saving for college. Simple things such as showing your teen how to set up an automatic transfer from their checking account to their savings account will entice them to save more. One U.S bank has revealed that those who have automatic transfers in place save as much as three times more than those who don’t.
To help your teen to save for college this is the best way to boost their finances and set them up for life. Knowing how to handle money starts with opening both a checking and savings account. Meanwhile, giving your teen their first deposit and encouraging automatic transfers are positive steps to take, too.