College Students and Money: Lessons for Kids and their Parents
Thank you for following this series on Ways to Guide a Child to Financial Maturity and Security! Over the past few weeks, we’ve shared some tips on how to introduce a child to the concepts of the value of money, how to encourage saving and how to show your teenagers to properly budget as well as other money management techniques.
In this post, we offer some suggestions for providing smart money management strategies to the college student. Whether you are attending a junior college, a four year university, trade school, in state or out of state, public or private, prestigious or not, you need to know smart money management techniques that will save you money, protect your credit and start you on the fast track to financial success.
- Seek student loans as a last resort – Public or private loans must be paid back to the lender within the agreed time period with interest. One way to avoid student loans is to procure scholarships which can be applied for year after year. There are thousands of scholarships available and most just require you to write an essay about your scholastic accomplishments, contributions to the community, career goals and financial need. The more scholarships you obtain the less money you’ll need to borrow!
- Open checking accounts with institutions that are available at home as well as at the location of the school – Not only should students shop for a financial institution like a credit union or bank that have the lowest fees, rates and best services, they should also evaluate if there is a branch in their home town for the parents to easily make a deposit into a joint account. In many cases, the parents are needed to supplement the college tuition and are often called upon to “send money”. The easiest and lease expensive way to send money is to deposit it into a joint account at home so they can access it at the college location.
- Communicate with parents, plan and stick to the budget – A budget is the roadmap to financial success but it’s only good if you’ve properly identified all expenses and you have the discipline to be accountable to them. With the co-mingling of information from the school, parents and students, a good budget can be created. Students need to do all they realistically can to stick to the budget and agree to communicate any problems to the parents so that the plan can be adapted as necessary.
- Own one credit card and stay away from opening others – credit card companies see students as great sources of profit and therefore bombard them with offers to accept their credit card. Since they are not giving away money but are making it easy to borrow, students should avoid the trap and only own one card instead of many others.
- Establish and protect your credit by paying all bills on time – Your credit is your financial ID and must be protected because it is a measure of how likely you are to pay off your debt. The better your credit rating the better opportunity you have to get the lowest rates on loans, the best apartments and even the best jobs. Because your credit is so important, you need to make sure to pay ALL bills on time. From rent, tuition, utilities and loans, all bills should be paid as agreed.
- Weigh the cost of transportation – if you own a vehicle, make sure to compare the cost of having the vehicle with you as opposed to leaving it behind. In many cases, when evaluating, gas, service, insurance, parking fees, registration and usefulness it is very likely that it makes great sense to not have a vehicle while in college. After all, you can always ride a bike or use public transportation. For social reasons, many students without vehicles become friends with those that do have vehicles and learn to pitch in on expenses.
Hopefully as a parent or as a college student, you can use these smart money management techniques to save you money, protect your credit and put yourself on the fast track to financial success during college and after.
There are many other ways to save money while in college. Here is a link to a site that list 51 Ways to Save Money in College. http://beingfrugal.net/2011/07/07/51-ways-to-save-money-in-college/
Thank you for following this series on Ways to Guide a Child to Financial Maturity and Security! The most important lessons expressed in these four posts are that it is vital to create a budget, understand the pros and cons of using credit cards, and strive to obtain and maintain a good credit score.
For children and adults, smart money management comes with proper knowledge, planning and implementation. If you implement these suggestions as well as the techniques provided to you in our previous posts, you’ll be on the way to becoming Money Smart before you know it!
Please stay tuned and feel free to leave your comments.