Millions of young people head off to college every fall, which means spending money on textbooks, extracurricular activities and social events. It is important that you teach your kids about personal finance. College is the time for your kids to learn not just academically, but also about being an independent and responsible adult, and that includes managing money. By handing down a few words of wisdom, you can give your college student the tools he or she needs to start off on the right foot financially.
Create a Budget
Many high school students spend whatever is in their bank account freely, relying on the generosity of parents and the earnings of a part-time job. Once they move away to college, it is crucial to develop a budget. You should sit down with your child to look at finances. Map out various streams of income, including income from a job, money you will provide them, and money from loans and other financial aid. Show him or her how to categorize all expenses in order to know where all the money is going.
Along with teaching your college student how to budget, take some time to discuss how to make smart money choices that fall within that budget. You know your child better than anyone, so if he or she spends most money on expensive clothing, take some time to talk about finding cheaper shopping options. You cannot force your son or daughter to stick to a budget, but you can at least do your part in informing them in the significance of money management.
Use Online Services
Most college students are unlikely to take time to go over finances in an Excel spreadsheet, so set your kids up with an online service or smartphone app that makes money management easy and convenient. Budgeting apps make keeping track of expenses more accessible for a college student who is busy and constantly on the go. You should also set them up with an online banking service so he or she can transfer money online or use mobile deposit features.
Minimize Student Debt
Cover all the bases of minimizing student debt:
- Spend on the right things. College students shouldn’t use their financial aid to fund going out to dinner every weekend, but temptation is always there. Inform your child to use loans wisely – it may look like “free money” now, but it will come back to bite you. As a parent, you should define what is and is not acceptable to pay for with loan money.
- Borrow only what is required. If your student needs to take out one or more student loans, remind him or her that the amount should be comparable to the type of salary available once he or she has gotten a degree. Extra money should not be borrowed to fund the extravagant college lifestyle.
- Fund extras with a job. College is a time to become educated, but it should also be fun. If your son or daughter wants to partake in social activities and events, he or she should do so with a part-time job rather than loans.
- Funnel extra earnings to loan payments. Try to add extra loan payments into your child’s budget by using funds from a part-time job or from monetary gifts. Loans are not technically due until after a student graduates, but paying them off while in school can help a student save serious money in regards to interest.
Look for Student Discounts
Vendors, local venues, restaurants and services near college campuses may allow your college student to become a master at saving them money, since they often offer student discounts. On top of saving money, they learn the value of hunting down deals.
Take Care with Credit Cards
Credit card companies pretty on eager and inexperienced college students who desire to be independent but are also looking for easy money. They also expect this naïve group to spend carelessly, racking up fees and high interest payments. Make a rule with your child to choose the best option together. Discuss the pros and cons of each option, set up a reasonably low spending limit and look for cards with points or some sort of rewards program.
Set Financial Limits
A way you can help your son or daughter curb spending is to propose financial limits for unnecessary purchases. It won’t prevent him or her from impulse buying, but it will give them pause to consider whether they really need the latest and greatest this or that. By setting a relatively low limit – around $100 a month – your child has some wiggle room without being able to go completely crazy.
Avoid Full-Priced Textbooks
Depending on the school and what classes your student is taking, prices for textbooks can reach $500 each semester. Some professors update texts each year, but the majority use the same from year to year, so you should be able to find used books at a lower price. Amazon and eBay carry a wide variety of textbooks, and there are also websites that specialize in used textbooks, like Chegg. The great thing about buying used books from these sites is that students are often able to sell them back when the semester is over.
Unless absolutely necessary, steer your child away from the campus bookstore, as it often sells at the highest prices. Look over class syllabi with your son or daughter to differentiate between “required” and “recommended” readings. Those labelled “recommended” are unnecessary in passing the class, and are more often than not a waste of money.
Protect Personal Information
College students are some of the hardest hit, yet most oblivious victims of identity theft. Caution your student not to share personal information, such as passwords or Social Security numbers, when not necessary.
Your child should also check bank accounts regularly in order to detect suspicious activity early and report it.
Sending your child off into the real world is scary, exciting and even a little sad, but as long as you give them the tools to succeed, it will be a beneficial experience that will teach them about responsibility.
Courtesy of Money Crashers
http://www.moneycrashers.com/financial-tips-college-students-save-manage-money/
