As college approaches for your child, there is no better time than the present to talk to them about their personal finances. It is our duty to make certain they have the tools to know how to budget and spend their money wisely. Whether you are fitting the bill or not, college can become very expensive with poor spending habits.
Here are 5 personal finance tips to get college bound students started out on the right financial foot.
1. Come up with a Budget they can follow
When kids are in high school, they have the enjoyment of spending whatever money comes their way. Once they are off to college, a budget really becomes essential. Whether your child is familiar or not with budgeting, now is the time to sit together and go over finances. You want to start off by mapping out their different streams of income. This includes money from student loans, grants, a job or any money you may plan on providing them with. The next step would be to show them how to group their expenses so that they have a clear picture of where each dollar is going. You may not be able to force your incoming freshman to stick to a budget, but you can feel a little confident knowing they have a clear picture of what is affordable for them.
2. Be very careful when it comes to credit cards
Enticing credit card offers and college students go hand in hand. Companies make a point of seeking out the inexperienced freshman who may be short on money. They count on the idea that they will be irresponsible and rack up late fees and interest charges. If not paid in full each month, credit cards are the most expensive debt you can incur. Not to mention the havoc it will wreak on their credit score. Make it a rule that your child cannot sign up for one of these student cards. If you decide they can open a card up, you can both take the opportunity to shop around for the best card. You will want to set a spending limit and it's worth it to find a card that gives points or cash back.
Restaurants, local establishments and any businesses near a college campus typically offer student discounts. This could add up to big savings for your freshman their first year. Seeking out discounts teaches your child the value of finding good deals. Before you know it, they will be masters at finding ways their college student status can save them money.
College textbooks can really break the budget. Although some professors may change their textbooks each year, many do not. This is where your deal hunting skills come into play again. There are many ways to go about saving on textbooks. You can check out campus bulletins, visit your local used bookstore or even check online at Amazon or Ebay. Your on campus bookstore may even offer a rental program, so be sure to inquire.
Identity theft is rampant among college students. They are an easy target with most not detecting fraud for months at a time. Make certain you tell your child to never share personal information. Things like giving a password to a friend or leaving personal documents around, can make them an easy target for identity theft.
In order to catch any theft or fraud before it does too much damage, your child should be regularly checking their bank and credit accounts. If something is off, they should report it immediately. They should also take advantage of a free yearly credit report to further ensure their identity has not been compromised.
As you send your children off to college, this is not just the beginning of a new stage, but an opportunity to see whether your advice and financial training has paid off. It is to be expected that they will not always make the best financial decisions, but if you have provided them with a solid foundation, they should survive the first year without too many blunders.