Start cutting the cord on college financing early. Kay says to let teenagers know a portion of their time must be spent earning money for college, whether it be from a higher GPA or excelling in extracurricular activities. Kay says researching local, affordable schools; applying for state scholarships, grants and work-study programs; or joining the military are all ways to reduce college costs and earn money for college tuition and living expenses.
She adds that raising adults who take responsibility is the goal because that time period between ages 18 and 22 is when you should be cutting the cord on most financial responsibilities.
"Giving teenagers access to your credit card sounds counterintuitive, but avoiding the topic is a horribly misguided approach to teaching kids how to use credit and achieve a good credit score," says John Ulzheimer, president of consumer education at SmartCredit.com. "You have to assume they will use a credit card, so teach them how to use it sooner rather than later. Adding your older teen to your credit card account is the equivalent of driver's ed and a learner's permit when it comes to credit usage," he says.
Ulzheimer and Kay agree on never co-signing for loans or credit cards for your kids, no matter what age. "If you co-sign, they control the card or loan but you have equal debt liability if an account defaults. It puts your own debt-to-income ratio and credit score at risk," says Ulzheimer.
Kay says, "The baby boomer trend is to bail out their adult kids repeatedly, which deteriorates parents' own wealth and retirement."
A "boomerang kid" is an adult child who returns to live at home again later in life."When a boomerang fails to launch or refuses to leave home, you've got to cut that cord," says Kay. "Make it as uncomfortable as possible for that adult child to live at home. Instead of feathering the nest, add a few pine cones to make leaving the nest seem more attractive -- and then they will fly."
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