Whether or not financial responsibility is already a family value in your household, talking about how to be financially stable in college with your bound teen can be as intimidating as the “birds and the bees” conversation. But regardless, pre-college is a great time to prepare your student for the real world – and what it costs. They’ll only be as successful as they are prepared. Here are some tips to making your dialogue about financial responsibility productive and fun before they head off to college.
Choose a School That Makes Sense for Your Wallet
Where to go to school and how to pay for it is only part of the money management conversation. Prep your children before they settle their hearts on a dream school to set realistic expectations. It’s tempting to attend a school because of an alluring brand name, championship football team, or because other friends are attending. However, at the end of it all, those big-name schools offer little additional value when it comes to building a career. Studies have shown that the job prospects are essentially the same. But the debt is more with a pricey school. Discuss what funds you’ll be fronting towards their education (if any) and explain that student loans are expensive.
Don’t Rely on Credit Cards
Credit card companies start targeting teenagers in college-ready years, and a lack of understanding can send a well-meaning freshman catching up with plastic debt well into adulthood. Opt for a debit card vs. a credit card in early college years.
Is the student going to work while they’re in school? Consider how they’ll manage income and expenses. It’s common for people to graduate from college with both student loan debt and credit card debt. Talk to your child about these issues before they’re on their own. Work out a budget with them and discuss the pitfalls of credit card debt.
Make Use of Resources and Banks for College-aged Students
Help your child open a bank account where they’ll be going to school. Many universities offer credit unions which can offer low-fee banking and competitive interest rates. Additionally, help them create an emergency fund that they can use for unexpected events (e.g. car troubles; unexpected travel). This emergency fund will help prevent students from turning to credit.
Finally, guide your teens to identify and utilize campus and financial resources. While it’s important to help educate your child about financial responsibility, it’s just as important to teach them to fend for themselves. Help them locate the best tools and financial learning resources, like the registrar’s office or free finance classes. You’ll be proud to see them take responsibility for their money while you can focus on encouraging their dreams.
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