Going to college is one of life’s most exciting events, but many students don’t realize it’s more than tuition, studying and fun. It may be the first time they have to manage their own finances. Parents can help by starting the conversation about finances early and teaching good habits while their student is still at home, so that when it’s time to head off to school, both will feel more confident. Here are four ideas that might help:
- Teach budgeting.
- Go mobile.
- Teach the importance of wise credit card use.
- Open a student-friendly checking account.
A college freshman is likely to have a fairly fixed income and predictable expenses. You can teach the basics of budgeting by showing your student how to create a simple spreadsheet of income and expected expenses. That way, he or she will know exactly what will be left over after the necessities are paid. And, encourage your student to open a basic savings account and put away a small amount every month for unexpected expenses.
Having a firm understanding of budgeting will be especially important if the student will receive a student loan check that will include funds for living expenses and textbooks. A large account balance can present a lot of temptation to anyone, but knowing how to pace spending will ensure the funds will last until the end of the semester.
Does your student spend a lot of time on a smartphone? There are lots of great apps available for money management, especially from financial institutions. Many have budgeting tools and alerts that make tracking spending a breeze. Have your student download their financial institution’s app and show them how to use it.
Students should understand the benefits of good credit and the importance of limiting credit card debt, especially if they’re planning to rent an apartment or finance a car after graduation. Getting them started with a prepaid card like Navy Federal’s Visa® Buxx Card before they leave for college is a great way to help them practice good judgment with limited consequences (as it won’t affect their future credit). Parents can add funds to the card any time and monitor spending to see what types of financial decisions their student is making.
Many financial institutions offer checking accounts custom-made for college students. Look for an account, like Navy Federal’s Campus Checking, that has no minimum balance and no monthly service fee.
By giving your student an increasing amount of financial responsibility as they grow, you’ll be helping them develop good financial habits. Although you can’t plan for every financial situation, talking honestly about financial risks and responsibilities sets the stage for a lifetime of skilled money management. Learn more and review the basics of budgeting together.