Heading out into the real world after high school is an exciting time. New school, new place, new friends, and new challenges. One of the major challenges college students face is finances. Times are tough in college and the majority of students are living meal to meal. Before sending your child into the new world of young adulthood, prepare them for what is to come in their financial life ahead.
Balance The Books
With the digital age in full swing many young adults don’t know how to balance a checkbook register. Ok, ok maybe the paper ones are obsolete, but the skill is still very important. Budgeting and balancing your checking account is extremely important for not overspending. Make sure your kids know how to create a thorough budget, track their spending and monitor their accounts. You can even use technology to help. There are tons of money management apps and websites like mint.com that can keep things organized and even send alerts when the budget limit is nearing.
Use Credit Wisely
It doesn’t take long before college students start to see those first time credit applications roll in. As tempting as applying for a first credit card might be, this is usually a mistake. Instead of having their own card, set your child up as an authorized user on your account. This can help you monitor purchases to make sure they don’t get into too much debt too quickly. Once they can display a responsible pattern of purchases and payments, then help them choose a low-limit card to strike out on their own.
Besides credit card debt, too many college students over borrow their student loans. High balances is the fastest path to credit score disaster, so take the time to help them decide how much they really need to borrower and whether they can find funds to cover tuition and books elsewhere. Shop grants and scholarships to find the free money. Find out exactly how much tuition and books cost, and discourage borrowing any more than is absolutely needed to cover these expenses. As they continue along the path towards graduation, discuss a plan for repayment of their loans. Any money they can save or put towards their loan now can help protect their credit score from high student loan balances later.