Your child has navigated high school, taken the SATs, chosen a college and looks forward to the new-found independence that college life offers. For most young people, college marks their first experience living on their own, with all the freedom and responsibility that comes along with it.
As a parent, you know that they’ll learn much more than academics alone. They’ll also gain valuable life skills during their college years, including learning how to manage their college finances. A little guidance now will help ensure that your child has the tools necessary to make sound financial choices along the way.
Talk to your child about budgeting. Break down what your child’s monthly living expenses will be and add a cushion for incidentals. Warn him or her about the risk of burning through all their spending money in the first month of school, leaving them broke for the remainder of the semester. Suggest an online budgeting tool, like Mint.com or MyMoney.gov, to help highlight areas of spending that they might not have been aware of – and show areas where they can cut back.
Watch out for credit cards. College students get bombarded with credit card offers. While the college years are a good time to establish credit history, it’s also easy to get into credit trouble. Different offers can be confusing, with fees and charges hidden in the fine print. Talk about making smart credit choices and make sure your child understands how quickly interest charges and late fees can add up. Look for a credit card with a low limit, or consider sticking to a debit card instead. That way, your child can learn to use credit responsibly without inevitably causing too much damage.
Shop around for bank accounts. Banking might seem like a no-brainer, but different checking and savings accounts have varying fees. Find out if your student’s school has a credit union, or look into local banks that have special offers for students. Be cautious about overdraft fees and make sure your child understands the ramifications of overdrawing their account.
Encourage your child to contribute. Kids are often more thoughtful about spending their own money than they are about money that just magically appears in their bank account each month. A part-time job is a good idea, not just to help with college finances, but to give your child a jump start on job applications when he or she graduates from college. If your child’s coursework is too demanding to allow for a part-time job during the school year, limit work to school breaks and holidays.
Westface College Planning can help navigate the financial aid process from start to finish. To learn how we can help you call us at (650) 587-1559 or sign up for one of our Tackling the Runaway Costs of College Workshops or Webinars.
Photo Credit: eric731