Gaining 15 pounds and balancing a social life during freshman year aren’t the only things your child will have to worry about once the school year starts up. Forget about the dreaded ‘Freshman 15’ or maintaining a social status, let’s talk about money. Click To TweetThe college experience is partly about becoming a responsible adult, and perhaps most importantly, that means learning how to live on a budget. Since college is the ideal transition period into the responsibilities of adulthood, it’s also the ideal time to talk to your college student about personal finances.
We know that money can be a stressful topic to discuss, but getting your freshman accustomed to creating and managing a budget will have some positive long-term effects. As a parent, you should try to help your child avoid poor spending habits and teach them to avoid unwise financial decisions. All it takes is a bit of guidance and some simple financial tools.
Even as an adult, setting and achieving your financial goals can be tough. It’s okay to seek a bit of help every now and then. That’s where Abigail Y. Murray, CPA, LLC comes in. Your financial success, and that of your child’s, is our goal. We offer services to help set you on the right path to personal financial success, so give us a call today and let’s get started.
Check out the following tips to ensure your child starts college, and their financial journey, on the right foot.
Make a Budget. Creating a budget is perhaps the single most important lesson any new college student should learn. Click To Tweet Simply being aware of the flow of money will help them realize that their money pool is not limitless. A lot of high school students have the luxury of mooching off their parents’ finances or relying on a small income from a part-time job. However, once college life kicks in, and all the expenses associated with it emerge, your child’s financial responsibility should be front and center – just like their studies. A budget will serve as the foundation for your child’s financial development.
The hardest part about building a budget is sticking to it, especially for the college freshman. Click To Tweet Your child will need guidance in making wise financial choices that fall within their budget limit. While it is tempting to take over your child’s new financial responsibilities, because you have much more experience in the area, let them take the reins. Your freshman should know what is financially feasible within his or her budget and how to allocate funds for a variety of expenses.
Beware of credit cards. A first-time credit card holder, who is also a student strapped for cash, should never make the decision to open a credit line alone. In fact, credit card companies feed off desperate college students by promising free items and rewards with every credit application. Before long, students are stuck with high interest charges and credit card debt on top of student loan debt. If your child wants to open a line of credit, or if you feel they could benefit from a credit card for emergency situations, then find the best option together. Sit down and go over the pros and cons of several cards. Look for cards that have relatively low spending limits and offer cash back rewards or points.
A debit card is another option you can manage with your child that will encourage financial responsibility. Click To Tweet In a joint, or student account, you can deposit an “allowance” in his or her account or help them to maintain an emergency fund. You child should be aware of how much is available in the checking account to avoid those expensive overdraft fees, or to protect your student’s checking account from those unexpected charges, you can turn off overdraft protection all together. A debit card will teach your child how to manage funds and to understand that money is limited.
Shop smart. With textbook prices on the rise year after year, the thought of staying on budget seems far-fetched. Luckily, you and your child don’t have to shell out hundreds of dollars for textbooks every semester. Just be mindful of a few tips and tricks. Shopping as a financially responsible adult often involves looking for the best deals and coupons, and this is the perfect time for your student to learn how to do just that. School supplies and college textbooks can rack up a pretty bill, so shop around (especially online) for the best deals. Rather than purchasing textbooks at the university library where prices can be unreasonably high, shop on websites like eBay, Chegg, or Amazon. These online retailers offer more than schoolbooks and supplies at a discount, they also offer rental options too. Renting textbooks can result in big savings. You should also encourage your child to search through campus bulletins for used textbooks that other students may be selling.
College professors sometimes ask for the latest version of a textbook when the older version will do just fine. Your student can email his or her professor to find out if a previous version of the textbook is allowed or if the textbooks on the syllabus are mandatory or just suggested reading material. At the end of each semester, your child can sell his or her used textbooks to other students for some extra cash. A few great places to post about used textbooks are the campus bookstore, social media, and online book retailers. The money earned from your child’s used textbook sales can go toward new books in the upcoming semester.
Enforce limits. Smart spending is not always achievable. Nobody is perfect, and we all like to splurge once in awhile. If you teach your student how to weigh the pros and cons of most purchases, then they’re more likely to make sound financial decisions. Work together to set a dollar amount – like $50.00 – and let your child know that any purchases above that amount should be carefully considered. Identify expenses that are priority against expenses that are simply luxuries – it’s basic economics of wants versus needs.
Another unfortunately reality is that not every child is lucky enough to have a full-ride, all expense paid, college experience. If your child is relying on student loans, make sure the money from those loans are being spent exclusively on school. Tuition, books, housing, and food plans fall under school expenses. Everything outside those necessities should be paid for with money that hasn’t been borrowed. Extra expenses should be funded with a job or work-study. If you know your child will want to enjoy a comfy social life with a comfy shopping allowance, then encourage him or her to get a part-time job, especially if your child is good with time management. Freshman should be taught to live frugally.
Go digital. College students probably won’t sit down to keep track of their finances on a spreadsheet, and that’s okay. Considering that your college kid probably spends a lot of time on their phone, take advantage of this. There are better options available that cater to a college student’s lifestyle while making money management easy and convenient for them. Mobile banking, for one, offers a host of services to keep your college student on track, like payment alerts or quick money transfers. Some phone apps offer integrated money management services that can connect bank accounts in one interface and send alerts for upcoming payments. In today’s fast paced tech world, budgeting is made more accessible for the busy and distracted college student.