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How To Have “The Talk” With Your Teen

And, no, this has nothing to do with the birds and the bees.

By the time your baby hits junior year of high school, you’ve likely survived your share of awkward conversations about sex or drinking. But as one of life’s most expensive decisions — college! — looms, how do you break the news that you don’t have a cool quarter-million earmarked for Ivy League tuition? Or that you expect her to work to help pay for classes?

Even if you’ve sidestepped money conversations for, oh, the last 17 years, now’s the time for brutal honesty, says Jayne Pearl, author of three books about kids and finances. “The good news is that you don’t need a Ph.D. in personal finance to help your kids.” She walked us through a few talking points:

Start by talking about dreams — not dollars.
Pearl’s own son, now 29, dreamed of touring the country as a musician and had his heart set on Boston’s private — and pricey — Berklee College of Music. But she knew that attending an expensive school could actually make it harder to reach his goal. “I said, ‘I don’t want you to finish college with the equivalent of a mortgage in student debt, because it will narrow your options,’” she says. After a lot of discussion, Pearl and her son agreed it made more sense for him to attend a commuter college, which allowed him to graduate with enough financial flexibility to pursue his dream.

Conversely, if your child is set on becoming a lawyer, doctor, or aerospace engineer, shouldering heavy debt in order to attend a premier university may make sense. That’s because in high-prestige or highly specialized fields your choice of school can have a significant impact on later earning potential.

Make sure they have skin in the game.
Regardless of how much you plan to subsidize the cost of their degree, your kid needs to appreciate that this is a big deal, Pearl says. “Whether they’re financing most of their own education or just paying for books, being partly responsible can motivate students to maximize the experience.”

Be frank about where you expect the money to come from, and who will be paying for what. Most schools offer detailed cost breakdowns of the line items that make up college expenses: tuition, meal plans, housing and health insurance.

Offer a credit lesson.
Sure, that first-semester tuition bill may prompt you to invest in a fainting couch. But just as big of a concern is how your teen will handle basic living expenses — and what your response will be if she blows through a semester’s worth of spending money before midterms.

If you’re planning to give your child a credit card “for emergencies,” carefully define the terms. “If pizza’s not an emergency, say so,” Pearl says. You also need to take him through the basics of credit — how slip-ups can mess with your score, how interest works. Keep in mind that this topic can seem mysterious and frightening to students who were young during the Great Recession, Pearl says, so it’s important to discuss early and often.

Finally, back off.
Though it may be tempting to log in to your kids’ accounts, open their bank statements or even pay their bills, it’s better to cut the cord. Young adults need this time to grow the skills and confidence needed to manage their (inevitably more complicated) finances later on in life, Pearl says. Once school begins, consider scheduling a monthly check-in to go over their spending. As your child grows more comfortable with managing a budget, you can dial the meetings back to quarterly.