It’s about that time of year again. A fresh crop of high school graduates and their parents are heading to the discount stores to buy all of the college dorm room essentials. Food, bedding, electronics, office supplies, and a retro looking lava lamp are only a few of the must-haves for every college student.

Maybe you’re one of them. If so, congratulations on getting a part of your house back! Your days of freedom are getting closer and closer but along with buying your college bound child a brand new laptop computer, you have another job to do that is far more important. You have to have, “the talk.” No, not the birds and bees talk, hopefully you already had that one. I’m talking about the money talk.

Bankruptcies are up

In fact, 1.5 million filings this year are forecasted. More and more people are finding themselves too deep in debt to get out and bankruptcy is their only option. Among the many problems, though, is that it ruins your credit. It will likely be about a decade before your credit recovers. High interest rate credit cards and the dream of owning your own home shattered are only a few of the realities that come with bankruptcy.

College is more expensive than ever

Did you know that the average college student graduates with 2 to 3 credit cards? Did you know that the rate of bankruptcy among recent college graduates is quite high? Between college debt and for some, more than $15,000 in credit card debt, it takes quite a toll on the graduate who expected to get a job right out of college but found the market to be dry.

While there may be a lot of important “talks” to have with your son or daughter before they head off to college, one of the most important ones is about money. Tell them to just say no to those free T-shirts just for signing up for a credit card. Tell them that you will gladly buy them a new T-shirt if they need one that bad.

Tell them that the best gift they can give to themselves is forward thinking. While college graduation seems like a long way off, it will only be a few years before they are walking in another graduation and if they graduate and don’t have a job lined up, the credit cards and student loans could be a problem. It’s imperative that the college student graduate with the least amount of debt possible.

Prepaid, prepaid, prepaid

As parents, consider getting your child a prepaid credit card that you can reload and track their expenses. Tell them that as long as they are responsible spenders you will finance a certain percentage of their day to day expenses.  Make a financial lesson out of their college experience.

Start early

Finally, if you’re just starting out on the journey of parenthood, start saving for your child’s college education as early as possible. Consider a 529 plan that allow you to invest for their education. Have enough money available so they can go to college with not only their tuition paid but some of their expenses. I’ve even heard of making study time a part time job. Pay them to study so many hours per day and have them show you evidence of their work.

Fight college debt as aggressively as you can. It will help your child learn about financial management while allowing them to graduate with little to no debt.

Popularity: 4% [?]