How one couple prepared their daughter to manage her own finances
Janet and Ron Goddard's daughter, Kristen, recently began her first semester at a major university. To make sure they're all on the same page about money, Janet and Ron offered her these ground rules for managing her finances.
Stick to a Budget
Kristen's parents helped her develop a monthly budget that earmarks some of the income she'll earn from her campus job for necessities such as school supplies. The budget also allots spending money from Kristen's own savings for clothes and snacks during late-night study sessions.
The Goddards want Kristen to take steps toward self-sufficiency, so they helped her set savings goals to pay for big-ticket items such as a March break trip. But they are willing to assist Kristen financially. For example, they offered to cover half the price of a used car and include Kristen on their auto insurance policy.
Minimize credit-card use
The Goddards co-signed for Kristen's first credit card. Credit cards are a great way for university kids to build up their credit history, but missed payments and high balances can get a young adult's credit score headed in the wrong direction. To help Kristen develop good habits, the Goddards advise her to use her debit card for most purchases and reserve her credit card for emergencies.
Open a TFSA
The Goddards are also encouraging Kristen to start thinking about saving for her future. Indeed, the tax-deferred, compounded growth in a Tax Free Savings Account can do wonders even with small contributions over time.
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