Prepare your college student with solid money skills
Every student college student should have a working knowledge of the finances that make their world go around. According to many experts, college students who did not receive proper money management education from their parents are more likely to default on loans, accumulate excessive credit card debt and file bankruptcies early in life.
Here are some suggestions when it comes to teaching students financial responsibility and learn effective money skills.
- Help Establish A Budget – Every student should learn early on that there is a very real system of money coming in versus money going out. When it’s gone, it’s gone. When it’s there, it has to be budgeted for food, transportation, entertainment, whatever.
- Get A Job – I’m not sure why but this suggestion always gets some “jeers” from readers. It’s unclear when the suggestion that a student should work to help pay for school became akin to profanity, but it’s at the very least politically incorrect. Students should work, at least part time, for a number of reasons. First, to teach them some sense of responsibility beyond the classroom – personal and financial. And second, to begin establishing a work history and building a professional network that will help them later. Employers are far more likely to hire a new college graduate who has some real-world experience, even if it wasn’t in the same field. Understanding management structure, taking direction, and showing a willingness to participate in a team environment can all be demonstrated by holding down a part-time job while in school.
- Open Personal Checking Account – Learning to manage a checkbook is something they rarely teach in school. The student should learn how to handle a checkbook, register, ATM card and how the cash flows through their world.
- Limit “Allowance” Money – Most parents provide some kind of cash or credit card allowance to their college student so they have spending money (particularly if the student is not employed during school). But most of the time, especially early on in their college careers, the student will burn through this money quickly, often running out well before the next bit of cash is handed over by the parent. Make this amount a fixed number every month and refer back to the budget you worked out earlier to help them learn to make it last.
- Use Pre-Paid Credit Cards Only – While many financial planners suggest that students should begin establishing a credit record as soon as possible, freshman year may not be the best time to be worrying about it. In fact, it couldn’t be worse. Students with a credit card can accumulate a great amount of debt in a very short time, particularly if that child had never been involved in the finances of the family before and doesn’t understand the repercussions.
- Involve Student In Financial Discussions – Parents often don’t want to burden their student with financial concerns, but, in the long run, they’re doing the child a disservice. Financial concerns affect everyone and when a student gets out of school, he or she will need to have a solid understanding of how to manage their finances so the best way to ensure that is to involve them early.
Whatever your student’s educational track, be sure it includes financial literacy and if you, as a parent, aren’t qualified to help, seek out professional experts. A strong set of money skills will be of value for a lifetime.