Top money tips to help your child after they graduate

Top money tips to help your child after they graduate

After three or four years at university, your child has graduated. The time has flown by. But what now?

  • They may remain in higher education.
  • They could come home for a rest.
  • Maybe they’ll live somewhere new, away from the family home.
  • They might take a gap year abroad.
  • Perhaps they’ll try and kick-start their career and begin the interview process.

Whatever they decide, this is an important new chapter in their life, and it should be an exciting one. Opportunities may be endless. Where do you fit in and what guidance can you offer?

Remaining in higher education

This decision may involve more student debt. It pays to understand the terms and the consequences.

Will the higher education be at the same university? Or will it be further afield, involving more travel? Might they even study abroad?

Do you need to fund their lifestyle, and if so, to what level? Is this realistic and affordable?

If they move out of their present accommodation, ensure that all the bills are paid. Don’t let them get a bad credit rating. Don’t forget to collect any landlord deposits that may be due to them. Above all, be frank and honest in your discussions about money.

If they want to be able to vote, contact the local authority to get them on the electoral register.

Transport may be an issue. This may mean a motorbike or a car – and if so, can they afford to buy one and run it? Neither petrol nor insurance come cheap.

Check the lease terms of any new accommodation and check that it’s thoroughly safe.

Do they have a bank account, and if so, what are the terms, overdraft limits and borrowing levels?

What about smartphones and tablets? Could money be saved by changing contracts? Is everything insured correctly? Which address are the bills going to?

study by Clear Score, which covered 117,000 students, found that on average students have a credit rating of 320, which is 15% lower than the national average of 380.

Returning home for a rest

Studies reveal that a period at home after three years of study is an increasingly popular option for graduates. A recent UCAS survey found that 31% of students intend to move back home after their studies. This is only 10% fewer than those intending to stay in the city/town where they are studying.

It may take some time to get back into the local swing of things. Friends may have moved on. Avoid having their bedroom become their cave.

Agree some house rules and set some parameters. They’re more mature now and they should understand the need for these.

Make sure outstanding bills are paid off and landlord deposits repaid.

If they want to be able to vote, contact the local authority to get them back on the electoral register.

Will they need transport? Motorbike or car? How will the running costs be budgeted for?

As noted above, make sure they have a functioning bank account and check the terms and conditions – especially for overdrafts.

What about the contracts for their smart devices? Could these be improved? Are bills being sent where they should be? And what about insurance?

Encourage them to get some part-time, local work. Agree a monthly housekeeping budget to cover their food and utility costs. And encourage them to learn basic financial management. This will cement good practice. All this will be a fraction of the price they would be paying if they were living independently and should enable them to save money.

Are they eligible to claim any state benefits?

Still, it may be wise to fix a limit (in advance) for this well-earned period of rest and recovery. The next stage of their life will arrive sooner than they think. Gently encourage them to start considering this.

Living somewhere new

If they don’t come home, but choose to live elsewhere, you’ll naturally want all the details.

Where and who with, for a start? What’s the motive? Work, friends or romantic attraction?

How are they going to afford rent or a mortgage? Do they have an income and a budget?

Mobile phones, transport, insurance, food, utilities and clothes (etc.) all cost a lot of money. And every month.

Do they need help to find a good-value energy supplier? Will they be a voter – and therefore on the electoral register?

Have they kept a clean credit record or do they need your help?

Are they living in a safe environment and do you trust their friends? Are the door- and window locks secure?

How often will they come home and how long will they stay with you? Does their timetable fit in with your own life? It’s in their interest as well as yours to find this out.

The gap year

The concept of the gap year is appealing, and about 250,000 students do it every year. About 80% of them do some paid work during their adventures, however.

It may not appeal to you, but that’s not necessarily the point. Interesting and productive gap-year experiences can add credibility to a CV. Lifelong friendships can be created. The time out also offers a buffer before 40 years of work. It allows them time to think and discover what they really want to do with their lives.

This infographic may be helpful.

Help them to embark on this journey with a clean credit score. Check for debts and unpaid bills.

If they’re travelling abroad, check out this gov.uk website for safety information.

Make sure any visa documentation is in order and check if inoculations are required.

Help them with foreign currency or make sure they have a bank card that will work abroad.

Request regular and frequent links via digital means, e.g. Skype or FaceTime.

You can’t be too careful, so get the contact details of at least one of their travelling companions and keep this up to date.

Check that their travel insurance is first rate.

Keep copies of all their legal and insurance documents at home in case of an emergency.

Do you know their blood type – and what about allergies?

Getting a job

A lot of first jobs are found by family contacts and not via a website. How can you help?

At the most basic level, do they at least have suitable interview clothes?

Could you do role plays or run Q&A sessions with them?

Check that their personal social media passes the sensible test. Unsavoury or embarrassing material may well be spotted by prospective employers.

Help them get a good graduate bank account with some perks.

What will the commute be like and how much will it cost?

If they come home with a contract, read it carefully with them.

What’s the benefits package like? Is there a pension?

They’re now entering the world of taxation, so watch out for tax-coding errors and reclaims.

Know the details regarding the minimum wage and the living wage. If there’s a probationary period, how long – and what are the conditions?

If they’re offered an internship, make sure the terms are fair and reasonable.

Help them get career advice and perhaps do some online personality tests.

Create good money habits

Of course you don’t want to be an intrusive parent.

The best gift you can give your children, here as elsewhere, is to lead by your own example. Money habits are learned habits. Your graduate child will have learned a lot from you already.

Try to be open, honest and candid about money, debt and savings. Always be ready to lend a helping hand but remember that independence must be allowed to develop. Don’t stifle it.

If you feel you and/or your graduate child may benefit from an informal discussion, call one of our expert financial planners here.

 

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