College costs shouldn’t be only the parents’ concern. Children can help out too—starting with keeping their grades up. Students who place in the top 20% of their class are sought after by schools and are often eligible for scholarships and grants. Also, if your child takes enough advanced placement (AP) courses in high school and scores well on the AP exam, he or she may be able to enter college as a second- semester freshman or even sophomore. Teach them to save and invest by encouraging them to set aside money for college as well. For every $25 your middle school or high school student puts in from babysitting or mowing the lawn, you can put in an equal amount. Once they’re in college, they can work 10–20 hours a week at an off- campus or, if eligible, work- study job to pay for personal expenses. Some financial aid counselors say students who hold part- time jobs actually have better graduation rates. Finally, students need to know how to manage their money before they leave home. Parents should take notes, too.)
- Make sure they understand credit. If your child has a credit card, make sure they know how it works. You may want to try a starter card—a prepaid, reloadable card that’s limited to $1,000.
- Create a spending plan so that your child knows how much they can spend each month on food, books, and entertainment, and what their spending allowance will be.
Don’t automatically bail them out: Your first reaction may be to send your child money as soon as they ask for it or get into a fi nancial bind. But if you start, you may not be able to stop. So let your child know they’ll have to get a job or work more hours if they spend more money than they are allotted for the month.
CNBC correspondent Sharon Epperson is the author of “The Big Payoff: 8 Steps Couples Can Take To Make The Most of Their Money – And Live Richly Ever After” (Collins)
(Editor's note: This story has been republished since its first appearance last year.)