Entering college means more than just enrolling in classes and meeting new friends. Many college freshmen are faced with the challenge of handling their own money for the first time, and they need to be equipped with some basic tools. Here are five fundamental lessons to teach your son or daughter before move-in day.
1. How to create a budget
Your college-age child may never have had to stick to a budget before, because you were always there to meet their needs and fill in the spending gaps. Every student should start college armed with a realistic monthly budget. You can provide an overview of how such spending plans work and offer advice as needed, but the young person should be the one to actually fill in all the numbers.
2. How to use online banking
You and your child should find a bank that provides a wide array of online services, including a remote deposit app and online money transfer options. Your child should learn to access current account balances and move money around as needed.
3. How to handle credit
Your child’s credit record will be more relevant to the future than any transcript, so prep your freshman about how to handle credit cards. New college students receive tons of offers to open new credit cards. They should check all the fine print to find one with no annual fee and a reasonable interest rate. Once they have a card, they should use it infrequently and always pay their bills on time.
4. How to save money on textbooks
A college student can easily spend more than $1,000 a year on textbooks when buying everything new. There are many money-saving options that you can help your child learn about, including buying used books through eBay and Amazon or renting them from sites such as Chegg.com. Remind them of the savings they can realize by selling books back at the end of the term.
5. How to live simply
This isn’t a single concept, but it’s important to talk with your college student about making careful choices for purchases and activities. Undoubtedly there will be classmates with far more spending power, and it’s OK to decline an overpriced activity. You can encourage your freshman to buy snack foods in volume at a grocery store, for example, and make late-night coffee in the dorm to save money for other activities.
Moving out of the family home is an important developmental milestone, and learning to be responsible about money is part of that maturing process. With some guidance from you, your child will be well-equipped to start building a prosperous future.