How to Talk to Your College Kids About Money

They’re all grown up. But they may still need your help on the road to financial wellness. Here’s what to say.

Written by Elaine King CFP® / May 26, 2022

Quick Bites

  • Talking to your college kids about money while showing them smart ways to manage their finances is the best approach.
  • Instead of giving money as a gift, tell them you’ll buy them a session with a money coach or book them a financial literacy class.
  • It’s OK to give them some financial support when they are just starting out, but don’t frame it as a handout.

Have you ever seen an eagle’s nest? They are usually on top of tall trees or on top of mountains. I once heard that it depends on the eagle mother’s knowing when to let go of her chicks from the high nest that will determine how high they can fly.

If the mother kicks them out of the nest when they are too young, they may not survive because their wings are not fully developed to sustain the wind and speed. If on the other hand, the mother waits too long after their wings are fully developed, they will never be able to sustain high altitudes because their wings developed without practice.

Like the eagle, knowing when to let your children leave your nest requires tough love so that you can ensure they will be able to thrive without you at some point in their lives.

When I heard the eagle story I thought of when I was younger. I left my own nest at 17, not quite of age, but old enough to work, go to university and take care of my basic needs. I also thought immediately of Paula, whose 60-year-old son is still getting an allowance from her.

Paula protected her only son so much he was never able to fully spread his wings and make his own living. Although these two examples may seem extreme, here are some creative ideas on how to ensure your eagle son or daughter will fly as high as possible in life when it comes to their financial health.

Inside this article

  1. Discuss your budget with them
  2. Be careful with gift giving
  3. Discuss consequences
  4. Get something in return

Discuss the household budget with them

Prepare an updated household budget, ideally the one from the year before so they can see how the expenses vary from month to month and average the months.

Categorize them by priority, with the top being the expenses that must be paid, such as the mortgage, utility bills and food, and toward the bottom list the expenses that are not a priority, such as entertainment, supplies and miscellaneous things that you can live without.

It is important to show the budget to your kids and tell them this is how you keep track of your finances and how much it takes to take care of household items. Explain to your child the difference between categories—fixed and variable—how to budget for non-recurring items and how to add savings to the calculation for things like vacations.

Next, identify how much you want them to contribute and then decide together what items will be their responsibility to pay for. For example, I work with a client whose adult child pays for the maintenance fees and utilities at their home—those usually don’t vary and are not that high.

It is important that your adult child contributes to part of your household budget for the time they plan to stay at home. Depending on your preference, you may chose to write a written agreement or put down a time period to review.

Be careful with the kinds of gifts you give

Avoid giving your kids money just because they are your kids and they deserve it. This behavior can create false expectations of entitlement and may hurt them once they go out into the real world and realize there is no such thing as a free lunch.

If your child asks for $50, instead of just giving it to them, first ask what they need it for, discuss if they really need it, and see if you can make that a part of their allowance rather than giving it to them outright. It is important for the child to understand there is a budget with a purpose for things in personal finance.

A creative idea for a gift would be a financial literacy class, a financial plan or a money coach to ensure your adult child learns the basics: building their own budget, managing their first paycheck, creating an emergency fund, evaluating credit cards, growing their money and protecting it.

Also, encourage them to share with you their financial goals so you can collaborate with your children in achieving them. You could say, “If you manage to do the things you want and find ways to save your money, I will match a percentage of your savings.”

For example, if you give your child $100, tell them that if they save $20, you will match 50%, or $10, and deposit that into their savings account for the future. Consider meeting them halfway or matching their savings to encourage them to earn their way toward attaining it by themselves.

Discuss the monetary consequences of their actions

We all love houseguests, but sometimes I wonder if we should have house rules for every person who enters the house, especially when your guest is your child coming back from college. Since they haven’t lived there for a while, the house rules may have changed.

Each home has its own rituals and they need to be respected. So make sure you clearly communicate these house rules in writing, covering chores, visitors, any curfews and expectations of how long they are welcome to stay. Recently a friend’s friend came to my house and broke my patio screen and also ruined my sofa; those two items cost over $1,000 to fix. Explain to your child the consequences of breaking, losing or misplacing things around the house.

Give them help if needed, but ask something in return

Depending on the profession or passion your child has chosen, it can be challenging to make a living, especially now with real estate costs at their highest levels both for purchasing and renting.

You might consider extending them a loan, preferably to launch their own business or buy the inventory they need to generate their own money and be able to afford their own rent. Most of my affluent clients like to give their adult children money to purchase their first home so they don’t have to worry about the most basic and largest expense.

Others have contributed to their business ideas and some have paid for their full tuition in college with the condition to pay it back in 20 years. With this last idea, you can teach them about debt management, interest rates, late penalties and early payments.

But even in smaller instances, say you want to give your child a $100 loan to buy sneakers, ask that they pay you back with interest. If you give your child a set allowance, remind them that anything they save can go toward the sneakers they have their eye on.

If your resources are limited, it’s OK to explain that to your child. But you don’t want to tell them money is hard to make because they could very well grow up to be too stingy. Neither do you want to tell them money is easy to make because they might grow up to be a spendthrift.

Explain to them that money is a finite thing and with smart planning you should be able to afford the things you need in life, but some of the things you want require extra planning. For example, it is a “need” to buy books for school while it is a “want” to get the latest sneakers.

There are many creative ways to talk to your adult child about money, but the best is using practical advice and making it a way of life. Instead of just saying, “Let’s talk about money,” involve them in taking these steps and ask them to participate. This approach has proven to help the families I have worked with over the years.

About the Author

Elaine King

Elaine King CFP®

Elaine has served as the Family’s Financial Planner for over 1,200 families and 100 multigenerational family enterprises crafting actionable family financial plans.

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