Financial Tips for College Students: Financial Lessons Your Children Should Know Before Leaving for College
With fall semesters starting late August or early September for most colleges, the first day of college is right around the corner for many. Starting college comes with many responsibilities and lifestyle changes. Your college student will be meeting new people, working towards a degree that will change their prospects for the future and most likely will be living away from parents for the first time. This is also the first time most of our children will be responsible for budgeting and managing their own money.
Although nothing can compare to living away from home for the first time, hopefully your children have some experience with managing money, including experience with allowances and checking accounts. If not, this summer provides the perfect opportunity for you to help educate them. Our financial tips for college students below are here to help guide the way.
Learn How to Budget
First and foremost, college students need to learn to create and manage a budget. Chances are, money will be coming from a variety of sources, including support from parents, part time jobs, and student loans.
- Ensure your student has a good understanding of how much money will be coming in and where it will be coming from. Are some sources only for emergencies or essentials, and other sources for luxuries?
- If your student has never had to purchase their own groceries and toiletries or paid gas and water bills, give them some guidance as to what to expect. Make a list of items they'll need to budget for, with expected costs.
- Help them create a budget before they leave for college, and help them re-work the budget once college starts when actual costs are available.
- Teach your student how much money can be saved by comparison shopping.
The second financial tip focuses on open lines of communication. Schedule time for a money talk with your child before they leave for college, to discuss the budget items listed above.
Open, honest conversation can be helpful as your relationship changes. Whether your student continues to depend on your financially or not, the ability for them to talk with you if money is tight can prevent them from getting into debt.
On the other hand, be clear that you do expect your child to use this experience to learn how to manage their own money. Living on a tight budget will help them learn the value of money.
Our next financial tip is to discuss debt. Student loans are common and essential for many students to attend college, but try not to allow getting into debt to become the norm. Take time to discuss how much your student will borrow and what for. Encourage them to think about whether what they're spending money on is worth getting into debt over.
Learn the Value of Education
Learning the value of education is a lifestyle and financial tip for college students. Try to help your student understand that the education they will be getting at college is valuable - and expensive. Working hard at college should be part of their money management strategy. If your student fails classes they will be in school for longer with more debt and financial strain on you as a parent. Highlight the fact that you have worked hard to pay towards their college tuition, and that they will need to work hard to pay off any college debt.
Learn about Financial Technology & Security
Budgeting doesn't have to be difficult, with various apps available to make money management easy. Help your student set up mobile banking or download their credit union app to make keeping track of their spending engaging and simple. Ensure your student also knows the importance of financial and online security, and keeping passwords and PINs secret. Using technology to your benefit is a great tip for college students.
How college is funded and your child's previous experience with money is likely to impact on whether you choose to open a checking account for your child as they enter college.
If you child has never had a checking account before, now might be the time to open one. Many credit unions offer student checking accounts to teach younger students age 13-17 about money management. As your child enters college, now's the time to think about transferring to a free checking account or rewards checking account.
If you will be providing your child with money, it might be beneficial to link their new checking account to your own.
Student credit cards can help build credit scores. If your child is ready for this next level of financial responsibility, consider a Student VISA® credit card.
Ensure your child understands the importance of paying the credit card bill in full each month, and discuss which items are best to purchase on a debit card versus the credit card.
If your child is not quite ready for their own credit card, consider adding them as an authorized user to your own. A clear understanding of whether this is just for emergencies or expenses is essential.
Teach your Student to Save
Hopefully managing an allowance or experience with a part-time job has already enabled your student to understand the importance of saving. If they haven't had the chance to learn, or don't really value the importance of saving yet, now is the time for that to change. Encourage your student to get a part-time job to learn to associate money with work, and learn its value. Encourage your student to open a savings account, with a set dollar amount from their paycheck automatically transferred to the savings account each month.
Consumers Credit Union is here to support you and your student as they enter college, with financial tips for college students, tools and resources, and exceptional checking accounts, savings accounts, and credit cards all geared toward students.