Sending a child off to college is more than a milestone – it’s an opportunity to begin transitioning financial responsibility while they still have the support and guidance of home. For families who have spent years building a strong financial foundation, the next step is helping their young adults develop the knowledge, habits, and confidence to manage money independently.
This checklist covers the key financial and planning steps to complete before your child heads to campus, from establishing their own accounts and building credit to coordinating 529 withdrawals, reviewing insurance coverage, and putting healthcare directives in place.
Before They Head to Campus
1. Execute Healthcare Directives
This is one of the most important and often overlooked items on the list. Once your child turns 18, healthcare providers generally cannot automatically share their medical information with you or allow you to make medical decisions on their behalf simply because you are their parent or that they remain on your health insurance.
Two signed documents can help ensure you are able to access information and advocate for your child when needed:
The two documents needed:
- Healthcare Proxy (Medical Power of Attorney): Authorizes you to make medical decisions on your child's behalf if they are unconscious or otherwise unable to decide for themselves.
- HIPAA Authorization: Allows healthcare providers to share your child’s medical information with you.
Your estate planning attorney can prepare both documents quickly, and it makes sense to handle them alongside your own planning review. Online services like LegalZoom (LegalZoom.com) can also provide a straightforward way to complete these documents from home. If your child is attending school in another state, consider having documents prepared that comply with the requirements of both states. Once executed, keep a copy at home, give your child a copy, and consider providing one to the student health center.
2. Coordinate 529 Withdrawals
Plan your 529 withdrawals before the first tuition bill arrives. Withdrawals are generally tax-free when used for qualified education expenses such as tuition, books, and eligible room and board expenses.
Timing matters: match each withdrawal to the calendar year in which the expense is paid. For example, a tuition payment made in December 2026 should generally be matched with a 529 withdrawal by December 31, 2026.
Keep receipts and records for qualified expenses as well. Certain expenses, such as health insurance, transportation, and extracurricular activities are considered non-qualified expenses. Non-qualified withdrawals are subject to income taxes and penalties.
3. Review Insurance Coverage
A few items are worth confirming before your child leaves home:
- Health Insurance: Your child can remain on your health plan until age 26. Before declining the school's plan, verify that your existing policy's network provides adequate coverage where they will be attending college, particularly if they are going out of state.
- Auto Insurance: If they are taking a car to school, notify your insurer and ask about any available student discounts.
- Renter's Insurance: If they will be living off campus, consider renter’s insurance to protect their belongings and provide liability coverage. Depending on your policy, some coverage may also be available through your homeowners insurance.
Building Their Financial Foundation
1. Open Accounts in Their Own Name
At 18, your child can generally open a checking and savings account independently. Look for accounts with no monthly fees or minimum balance requirements. A student or young-adult checking account paired with a savings or high-yield savings account can provide a simple foundation.
2. Build a Budget Before They Leave
Sit down together and map out expected monthly spending, including housing, food, transportation, personal expenses and savings goals. A framework such as 50% needs, 30% wants, 20% savings can be a useful starting point, although the right mix will depend on their circumstances.
The goal isn’t perfection – it’s helping your child develop a framework for making spending decisions and confidence managing money on their own.
3. Start an Emergency Fund
Help your child understand the value of having cash set aside for unexpected expenses. A starting emergency fund of $1,000 to $2,000 can help cover things like a flat tire, broken phone or laptop, or unexpected medical expenses without disrupting their normal budget.
Keeping this money in a separate savings or high-yield savings account can also reinforce the distinction between everyday spending and true emergency reserves.
4. Begin Building Credit
Adding your child as an authorized user on an existing credit card account may help them begin establishing a credit history. Once they turn 18, they may also be able to open a credit card in their own name, subject to the issuer’s eligibility requirements.
A secured card or student credit card with a modest limit can be a good starting point. Encourage them to make a small number of purchases, keep utilization low, and pay the balance in full and on time each month. Those habits can help establish a strong credit profile before they eventually need credit for leasing an apartment, car, or other major purchase.
A Note on Setting Them Up for the Long Term
The financial decisions your child makes over the next four years can help shape the habits they carry into their career and eventually their own wealth-building years. Families often spend decades being intentional about building and managing their wealth. Helping the next generation develop that same intentionality early can be one of the most lasting financial lessons a parent provides.
If you would like to discuss how these steps fit into your family’s broader financial plan, we are always happy to help.
— The BHPW Team