Growing up, my family didn’t have a ton of money. My parents made ends meet by relying on clearance racks and discount groceries. Despite never owning name-brand clothes, I can say wholeheartedly that my parents financially supported me and helped set me up for success.
If you’re like my family, it’s easy to feel disheartened. Social media and reality television can give you a skewed perspective of what supporting your child actually looks like.
If you can’t afford brand-new cars, luxury vacations, or the latest iPhone, that doesn’t mean you’re not a great parent. Instead, focus on achievable ways you can help your child mature into a responsible adult.
Here are five things you can do to financially support your child—without going broke.
1. Set aside money for college
The gift of an education is one of the greatest gifts you can give you to your child, but it can be prohibitively expensive. According to the College Board, a year at a public four-year university costs $9,410, on average. Opt for a private school, and that number jumps to $32,410.
Contributing money toward your child’s college costs can go a long way toward helping them thrive in adulthood.
Corey Thomas is a father of a young son. Thomas knows how expensive college can be, so he is focused on saving money early.
“He's three but he has a 529 plan,” Thomas said. “So we attempt to make regular payments in addition to kicking in any gifts he receives.”
If you start saving early, like Thomas, your money has more time to grow. But even if you get a late start, keep in mind that every dollar you contribute is a dollar less that your child will need to borrow to pay for school.
Setting aside money can be difficult when you have other competing goals, such as retirement or paying down your mortgage. Free up some funds to put toward your child’s college fund by reviewing your budget. Are there any extras you can cut, such as subscriptions or eating out? Over time, saving just a little each month can have a significant impact.
2. Look into health insurance for your child
Health emergencies and injuries are one of the leading causes of bankruptcy and debt. Children can be especially accident prone, especially when they’re learning to drive or if they participate in youth sports. A single incident can cause you to rack up thousands in medical bills if you don’t have insurance.
For blogger Ashley Patrick, health insurance is non-negotiable.
“It is very important for me to make sure my kids are insured” she said. “I have three kids so someone is always sick. Health insurance is one of the first things that comes out of our money. We also invest in an HSA because we have constant medical expenses. Because of all the costs we have to cut back in other areas.”
If you don’t currently have insurance for your child or if your employer doesn’t cover dependents, there are two other ways to get coverage:
- Children’s Health Insurance Program (CHIP): If you are within the income requirements, you can get low-cost or subsidized health care for your child until they turn 19 through CHIP.
- Healthcare.gov: If you don’t meet the income requirements for CHIP, you can still get coverage through Healthcare.gov. Open Enrollment starts on November 1.
By getting insurance, you also give your child access to preventative care. That gift can prevent health issues from starting in the first place, helping them save money once they’re adults.
3. Maintain a budget
If you don’t already have a budget, have your child sit with you while you create one. It doesn’t have to be elaborate; while there are free services like Mint that can help you make a budget, you can also do so just using a sheet of paper.
Write down your current after-tax income, then list all of your current expenses. If you’re outspending your income, discuss with your child the need to cut back and identify areas that can be eliminated.
By involving them in the process, you model solid financial behaviors they can use as adults.
4. Cosign student loans for your child
One way to make college more affordable for your child is to act as a cosigner on student loans. It’s a financial responsibility, but if you’re able to cosign, it helps in several different ways:
- Cosigning increases your child’s chances of getting approved: Most college students aren’t able to qualify for private student loans on their own. Having a parent cosign the loan helps them get the money they need to cover tuition and room and board.
- Cosigning could help your child get a lower interest rate: If you have good credit and a stable income, cosigning a loan can help your child get a lower interest rate. Over time, the lower rate can help them save thousands.
- Cosigning helps your child build a credit history: Because their name is on the loan as well as yours, your child will start building a stable credit history. After graduation, that will make it easier for them to get loans or even qualify for an apartment.
Cosigning can give your child a huge advantage. And, if you’re concerned about taking on the extra responsibility, don’t worry: Cosigning doesn’t have to be a permanent commitment. Some lenders, like CommonBond, offer co-signer releases. After making on-time payments for a set period, your child can ask the lender to remove you from the loan, solely taking responsibility for its repayment.
5. Encourage your child to get a part-time job
Once your child is old enough, encourage them to get a part-time job during the summer or on the weekends while they’re in school.
The money they earn can go toward their college fund, or they can use the money to cover their own incidental expenses, like trips to the movies. Working even just a few hours a week can help your child learn about managing money responsibly and make them more invested in saving for college.
Saving income for school helps reduce the amount they will need to borrow for college, which in turn, will save them money in the long run.
If your child needs help getting started, help them craft a resume and teach them how to find part-time opportunities. Check out sites like SnagAJob to find thousands of part-time jobs designed specifically for teens and college students.
If you’re financially able, financial advisor Winnie Sun recommended that parents go one step further to motivate their children.
“Encourage them to find a job and match the earnings dollar-for-dollar if they save or invest it,” she said.
Giving them a larger return on their money if they save or invest will incentivize them to hold on to their money, rather than spend it.
Empowering your children
As a parent, you want to give your child the very best. But you also have to balance that desire with living within your means. By using these tips, you can be a financially supportive parent without sacrificing your own well-being. The lessons you teach your children now will help them develop into successful and responsible adults.