Helping Your Recent Grad Create an Adult Budget
Watching your kids transition through life is exciting but deciding how hands on to be can be a challenge. Teaching without doing for takes some finesse but operating under the teach a man to fish vs. give a man a fish philosophy will set them up for a more self-sufficient future. After college graduation and just as they begin their career is a sweet spot, because although they are adults, kids of this age will still ask for, and need, guidance along the way. Assisting with the development and implementation of a personal budget is great, because their first job out of college is likely their first experience with consistent and steady income, as well as consistent and steady bills.
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Plan It Out
Sit down with your child and get everything down on paper that is included in a standard budget and fill in the specifics of their financial situation from there. If you are comfortable you can even use your own budget as a reference for them, so that they can understand how the creation of categories, and allocation of funds works based on real life numbers and not a general guide. Adding student debt repayment should be a main part of the budget, as this will be a longstanding bill for them. This is also a good time to talk about how that loan amount can be handled via refinancing.
You can refinance your existing student loans with a private lender in order to save money on your monthly expenses, something that at this early stage, your recent grad might not know, or think applies to them. The details around their loan application as an 18-year-old with likely no financial history might have changed throughout their collegiate career. The rates and terms they had to settle for in that stage might be able to be negotiated as they enter this new one. Learning about best practices for debt reduction as early as possible will be a great foundation for them to gain an understanding of how budgets do have fluctuations over time, even if the categories do not necessarily themselves fluctuate. Similarly learning some accounting apps such as Cloud based QuickBooks hosted on Cloud Virtual Desktop is recommended for increasing budgeting efficiency.
Encourage Realistic Habits
This stage of young adulthood is also meant to facilitate personal growth in the form of socializing, travel, and other enriching experiences. While it is best to guide your child towards a financially responsible future, leave room in the conversation for fun. Realistically at this stage it is unreasonable to assume that no money will be spent on fun, so include it in the budget conversation right from the start. Show them how they can afford to cover all the bases for saving, bill payment, and disposable income, and how budgets can actually provide some freedom, and not be completely restricted as their reputations would have people believe. The more examples you can provide that make sense for their specific point in life the better they will understand the lessons. Spend some time together learning about different approaches as well. Giving an understanding that they can use different approaches and methods to accomplish the same goals puts the control in their hands.
