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Five Money Conversations to Have with Your Child Before They Leave for College


High school and college graduation season is well under way, which means many parents are facing the reality that their children will soon be responsible for making real, adult decisions.

Today we ask, “what are some of the lessons you’ve taught your child - especially about money - before they begin this very important transition into adulthood?”.

In this blog post, we’re going to discuss how to talk about money with your child. We believe these conversations are especially important to have before they leave for college.  The way you handle the topic of finance now will have lasting effects on your child’s success, and also on your relationship with them as they transition into adulthood.  

Today’s youth are ignorant about basic personal finance, and I’m a great example.

As I’ve mentioned in previous posts, my personal history has been affected by money from a very early age. I’m an immigrant who lived out of my mom’s car in childhood. After I graduated from college, with $100k in student loan debt, the terror of my monthly loan payments drove me into a finance career. I spent over a decade building my knowledge and network, went back to school for 5 years while still working full time, and eventually teamed up with Stephanie Bucko to found Mana Financial Life Design. One of our business goals is to help families learn how to talk about money early and often, which will help them avoid common financial pitfalls and mistakes.

Like any type of confidence, building financial confidence requires practice, and engaging in money conversations is a great way to improve.

We’re going to spend the rest of this post outlining five essential money conversations we recommend our clients have with their children before they leave for college. The conversations we suggest are inspired by years of research, personal lessons, and input from college students we’ve surveyed.


No matter how well you’ve prepared them, your children are about to be faced with money-culture shock. This is difficult for many children to handle. Put yourself in your son’s or daughter’s mind and consider about what they’re about to go through: leaving home, going to college and living on their own. They’re going to make new friends - some of whom may be considerably wealthier than they are. They might feel pressure to change their behaviors around money to fit in. They’ll be entering the workforce, perhaps with a less-than-expected salary, and most likely more-than-expected debt.

The first conversation you should have with your children -and this is the most important one - is why we have to be open about money. How do you get your child to be open about talking about money? Well, it starts with you!  First, you should get comfortable talking about money with your spouse and your children. Ask yourself:

  • Does your child know how much you made when you graduated from college, and how hard did you have to work to get to where you are today?

  • Do they know how much their tuition costs?

  • Do they know how much and when you started saving for their tuition?

  • Do they know stories about money lessons you learned, the hard way?

A lot of parents may be uncomfortable talking about money, but just consider - what are you actually trying to protect your child from? These conversations can have a huge impact on how your children think and behave around money for the rest of their lives. If they’re afraid to talk about money, they may make any number of mistakes after graduation.

Here are some of the mistakes I made before I was comfortable discussing and facing my finances:

A year and a half out of college, I was working on Wall Street and spending way more than I was making. I applied for a credit card and very quickly accumulated $30k in credit card debt. My parents had never had a money conversation with me, so I was too afraid to ask for their guidance. Having an established line of communication about money with my parents may have helped me avoid or strategize around this very common mistake.


A lack of openness about money often creates fear. Fear can lead to avoidance in matters of personal finance. Many people cope with fear by attempting to ignore the consequences of bad money behaviors. This often manifests in an unwillingness to check account balances, making late payments, and anxious/avoidant feelings around financial procedures in general. These “helpless” habits and attitudes feed a common misconception that “once I make more, I’ll be better able to manage money” -- but this is a myth. Control and confidence will not arrive with a larger salary; they must be developed through personal behavior and beliefs. A startling 78% of U.S. workers live paycheck to paycheck - so it’s not just about how much you make. The key to being better at managing money is being aware and honest about your circumstances. The best way to achieve mindfulness is by having a budget. As a parent teaching a child, there are two parts to this:

  1. Teaching them how to be aware of the cost of things - both now and in the future

  2. Teaching them how to create an actual budget

The basics of budgeting are simple, and can be broken down into three components: Needs, Wants, and Savings.

  • Needs are the necessary expenses you pay for in your day-to-day life: housing, food, utilities, insurance.

  • Wants are the expenses that enhance your lifestyle: the gym, going to restaurants...or giving to a cause you care about deeply.

  • Savings is the money you save which will go to big purchases later on in life - like graduate school, a down payment for a home or retirement.

As parents, it’s really important to stress to your child how crucial saving is - no matter what. If they’re going to be on their own without much support, I urge you to help them begin saving this summer while teaching them the importance of having an emergency fund to tap into if something happens.

Discuss with them:

  • What expectations do you want to set around the money they’ll have at their disposal during college?

  • Are they expected to work to pay for any expenses outside the cost of tuition?

  • Will they be given a certain amount each month? If so, how much?

While you’re on the subject, be sure that you review how and if they’ll be receiving additional cash. If they’re going to school in a different part of the US, their local banks might not be the same as your current bank. Be sure to open an account with a bank that doesn’t charge ATM fees - like Charles Schwab or SoFi. If they will be receiving a certain monthly amount, work with your child to come up with a monthly budget covering what they should expect to pay for, using the segments of Needs, Wants, and Savings.


The actual median salary in 2019 for a college grad with 0-5 years in experience is $48,400. If your child will graduate with even a little student loan debt, the third conversation you’ll want to have is how student loans can impact the rest of their lives. Suffice it to say, if anyone here has any younger children, I can’t stress the importance of scholarships.

54% of student loan borrowers didn’t think to estimate the monthly payments they would be responsible for out of college. I graduated from Bucknell with $100,000 in student loans. One month after graduating, I became responsible for a nearly $1,000 payment each month for the next ten years.

An easy way to begin conversations about loans is to work with your child to estimate their future loan payment. These calculation heuristics are also quite simple: for every $10,000 in student loan debt, your child can expect to pay $100 a month.

The next step is to play out future scenarios with them. Do you think your child has an idea of the careers he or she would like to pursue after graduating from college? Look up the starting salaries of a few of these potential careers - how does your child feel about the career after seeing this number? This conversation is not meant to depress them about their future, but to be mindful and realistic about their goals. You don’t want to take out $200,000 in student loan debt if you’re expecting to hold a low-salary job. Having these conversations fosters a more meaningful, intentional attitude about money decisions.

There’s a lot of opportunity for money for your child’s education that doesn’t come with strings attached. A good way to get more financial aid is to apply for the FAFSA - the Free Application for Federal Student Aid. You must complete the FAFSA each year to qualify for aid. Filling out this form is another thing I recommend doing with your child, and it’s a good introduction into the responsibilities of being an adult.

If financial aid isn’t possible or isn’t sufficient, encourage your child to apply for scholarships. Not just this year, but for every year they attend school. A lot of people don’t realize that you can obtain a scholarship throughout college - not just when you get there. Even if you’ve planned to pay for their entire college education, you can take the amount they saved you through scholarship money and begin using it as an investment pool of assets.


When surveyed, 37% of Americans have no idea how their credit score is calculated.

Becoming financially confident has everything to do with understanding the factors that help you build wealth. A prime example of one of these factors in the United States is your CREDIT SCORE. Many young people have spotty credit reports because of their lack of credit history.

Having a good credit score is essential, which makes credit scores an important topic of conversation. Your credit is the running tally that financial institutions and creditors keep track of to determine your worthiness for being loaned money. Additionally, your credit score is a key factor in determining whether or not you get your first apartment, and it will be checked when you apply for cable/internet, utilities, and interest rates. Good credit will increase your chances of getting better interest rates when you buy or lease a car, apply for a loan to start a business, or when you apply for a mortgage for the first time.

Good credit is a way to save money and increase opportunities over the long term. If you speak to your child about it now, by the time they graduate and apply for a car loan or lease, you could save them hundreds of dollars in interest payments over the life of their loan. Ten years later, one conversation may save them thousands of dollars on their first mortgage.

The next thing you’ll want to walk through with your child is how your credit score is determined. This brief discussion will ensure your child isn’t in the 37% statistic we shared with you earlier. The 5 factors are here:

Payment History: 35% of your score is determined by your payment history. Early on in their lives, just one missed payment could compromise their credit score. Share with your children how you keep track of your bills and payments. If they have or expect to have credit cards in the future, explain the difference between Current Balance and Statement Balance on their credit card. Namely, if they pay their statement balance before the due date each month, they won’t be charged any interest!

Amounts Owed: 30% is your total debt, and how much of that debt you use month to month. One way to build your child’s credit is to add them as an authorized user on your credit card. Parents can help set a good baseline by getting what’s known as an “authorized user” card in a child’s name. Even if you just put it away in a drawer, away from temptation, your own regular payments will accrue to your child’s formerly blank credit report.

Length of Credit History: This makes up 15% of your credit score. Adding your child as an “authorized user” to your account can help build the length of their credit history.

New Credit Use: Another factor is new credit. This makes up 10% of the report and it shows your pursuit of new lines of credit and the amount of recently opened accounts.

Types of Credit Used: Finally, the last 10% accounts for the different kind of credit that you have.


If you have the first four conversations, your child will already be far more equipped than most college students. This final conversation will bring home the idea that time is their most finite resource.

It’s been said that “rich people have money, wealthy people have time”.

Between classes, studying, working and social outings, your child’s life in college will be busier than ever. It’s so important to impress the value of personal time upon your child. Here’s a simple exercise:

The minimum wage in California is $12.00.

Let’s say your daughter or son earns the minimum wage, and you’ve put them in charge of purchasing the “wants” portion of their budget in college. Make the connection between what they’re purchasing and how many hours of their time it will cost them. Is that $15 lunch worth an hour of their time? Is that $200 pair of jeans worth 16 hours? Help them make the connection, but don’t judge them on their decisions. If they really value that $200 pair of jeans, use it as an opportunity to discuss how you think about the value of your time - and how you make necessary trade offs during months where you have a big expense like that $200 pair of jeans.

Next, think ahead to a big discretionary expense that you might want your child to be responsible for, like Spring Break. Plot out a sample itinerary - flights, hotels, food and drink - and come up with a total. Divide that total by their hourly rate. This will help them connect how much they'll need to work to get to that number.

Lastly, teach them about compound interest.

Compound interest can be the most powerful factor in your wealth - or, if used incorrectly, the slippery slope that turns small debt into catastrophe - in either case, time is the factor that helps it grow.

The earlier and more consistently they save, the less they’ll have to save in the future. Here’s an example:

If you are 22 years old now and want to have $1mm saved for your retirement by the age of 65, you could use several different strategies that would get you to $1mm for retirement, assuming your investments grow at 7%.  

  1. Start saving in 10 years when you are 32, putting away $647 every month until age 65.

    1. Total amount saved = $504,660

  2. Saving $305 a month starting today for the next 43 years until age 65.

    1. Total amount saved = $157,380

  3. Saving $330 a month starting today for 33 years, discontinue saving and let it grow for 10 years until age 65.

    1. Total amount saved = $130,680

Tweak these conversations to however they fit into your parenting style, but however you do it, talk about money with your children. By having these 5 conversations with your children early and often, you’ll be giving them the power they need to create their own success in their life.


Cristina Livadary is a fee-only financial planner based in Los Angeles, California and is the CEO of Mana Financial Life Design. Mana Financial Life Design provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Mana specializes in advising professionals in the tech industry, as well as women who work in institutional investing, through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Cristina never receives commission of any kind. She is legally bound by her certification to provide unbiased and trustworthy financial advice.