Heading to University or College: How to Best Support My Young Adult?
Heading to University or College: How to Best Support My Young Adult?
They say (the best) things come in threes, so welcome to the third Aspect blog! September heralds the return to routine, but for some it’s not just back to school, it’s taking the next step into independence and heading for college or university.
As a parent, you want to do everything to support your children. As well as rounding up socks, packing the car to overflowing, and trying not to show your devastation until you’ve driven away, there’s lots you can do to give them a good financial grounding, whether that’s upfront funding, guidance on managing money, or strategic investments. Let’s have a quick rundown:
1. Help with Budgeting and Money Management
One of the most valuable lessons we can pass on. The lump sum of a student loan can be a challenge to stretch across rent, bills, food, study materials, and social activities: the temptation to “spend now” having greater implications than “beans on toast” for the last weeks of term! Yet talking about budgets and finances is often something we neglect, for one reason or another. So, before they go, take this opportunity to:
· Discuss, role-model and involve them in your regular financial budgeting.
· Encourage them to create a monthly budget that will account for their upcoming regular expenses, and help separate “wants” from “needs.
· Budgeting apps like Emma and Money Dashboard can help track spending.
· Teach them to monitor their student bank account regularly and avoid unnecessary overdraft use.
2. Be Strategic with Living Costs Contributions
If contributing financially, be clear about what this is for: rent, food, or emergencies. An effective strategy is to top up a child’s income in regular, predictable payments, rather than a single lump sum. Not only does this prevent blowing the budget too early, it foreshadows monthly salary budgeting.
3. Worthwhile Investments: ISAs and Savings Accounts
For longer-term support, consider opening a Junior or Lifetime ISA before your child starts university or college. These tax-free savings options can be used for education or first-home purchases, and some offer government top-ups (the Lifetime ISA adds a 25% bonus, up to £1,000 per year). If transferring money to your child, use a savings account to collate: every little helps!
4. Explore Buy-to-Let Opportunities
Some parents consider buying a property for their child, and potentially others, to live in as an alternative to the insecurities (and no return) of the student and open rental market. Under the right circumstances, this can be a financially sound option.
Advantages:
· Your child avoids rent or can live at a discounted rate.
· Spare rooms can be let to other students, covering mortgage or investment costs.
· The property may increase in value, offering capital growth over the three or more years.
· Flexibility at the end of their studies, including continuing as you are, transferring to them, continuing as a student landlord, selling, or even moving into yourself (the just-realised plan of a very happy client with a lovely flat in Edinburgh).
Considerations:
· Significant Initial outlay if you buy outright, or the commitment of a buy-to-let mortgage (deposit and payments).
· Legal and maintenance landlord responsibilities and obligations.
· As with any long-term investment, resale value and rental demand in the area should be carefully assessed.
Loosening the Strings, Strengthening their Security
Supporting a child through university isn’t just about handing over money: it’s about setting them up for financial independence. At Aspect Mortgages, we are experts in all the ins and outs of buy-to-let, as well as finance and estate planning. As independent advisors, we can genuinely find the option that best suits your situation and goals, with tailored advice and ongoing guidance as life moves and changes.
For future and generational considerations that mean so more than just decimal points, never hesitate to call us on 01257 812345, drop us an email [email protected], and keep an eye on our Facebook for the latest news and tips.
Best wishes, Rachel, Richard and all at Aspect Mortgages
