Financing your child once they’ve left for university

It can be a trying time for parents when their child leaves for university. Your child is growing up fast and will have control over their personal finances for perhaps the first time. When this day finally arrives, the question on every parent’s mind is just how much independence they should allow their child and what useful guidance they can give to them.

Your child will want as much independence as they can get. However, they will still be open to advice, particularly about financial matters, and you should take the opportunity to instil some sound financial good practice to help them make it through their university years with as little outside interventions as possible.

Another excellent way to work with your child to control their finances is to take out a pre-paid credit card. Unlike a debit card, which takes money direct from your child’s bank account, or a credit card, which allows money to be borrowed up to a set limit, a pre-paid card enables a set amount of money to be loaded on to it each month.

The core benefit of a pre-paid card is that it only allows your child to spend the amount loaded on to it. Whether you load a set amount on to it each month, or you let your child load their own money on to their card, it nurtures responsible spending habits and sensible monthly budgeting.

Remind your child of the vital importance of effective budgeting. Creating a basic spreadsheet tracking their monthly income and outgoings will help them keep a firm grip on their spending and steer clear of the need for overdrafts.

Reliance on overdrafts, which can incur a fee, is a bad financial habit to fall into, particularly in the current economic climate. Helping your child to realise the importance of only spending what they have and keeping a small sum aside for unexpected expenditure is the best way to help them help themselves.

University can be very expensive, so encouraging your child to secure holiday work or indeed a few hours work over weekends is a wise move. Your child will want to let off steam and socialise, but balancing that against earning enough money to keep them afloat is the common reality for students these days.

Offering advice, checking up on your child’s financial situation and striking a fair balance between support and independence will encourage your child to adopt the financial skills necessary to steer clear of debts.