By Jennifer Hunter, Ph.D., University of Kentucky Family Finance Extension Specialist
Do you have a son or daughter who is college bound this fall? Prior to heading off to college, it is important that students have a basic understanding of money management skills.
For many students, college may be the first time they have been responsible for managing their own money. Even if mom and dad are paying all of the bills, they will not be around to help their child make everyday spending decisions.
Often students can be tempted by credit card offers or feel peer pressure to spend more than their budget will allow. Overspending and poor use of credit while in college can have lasting effects on financial success following college. Talk to your student to help them develop a plan for handling their money and expenses once they get to college, share the following money tips to help get their college career on track financially.
- Encourage your son or daughter to establish a local checking account. Often larger universities will be affiliated with a credit union that offers student accounts. A local bank will provide your college-bound kid with easy access to cash checks, make deposits, or utilize ATMs. Look for a bank that has low or no minimum balance and be certain to review the fees for overdraft and number of transactions. Have your child setup text and email alerts from their bank account for low balances.
- Urge your son or daughter to avoid getting a credit card. Often college students (and parents) feel the need to get a credit card in case of emergencies. However, credit cards become a temptation and can lead to non-academic debt.
- If your child has bills, such as cable, internet, or other utilities in their name, stress the importance of paying bills on time. You may need to help your child setup online banking or automatic bill pay to make bill paying simpler.
- Help your child establish a spending plan. If your child receives a lump-sum at the beginning of the semester from scholarships or student loans, help them develop a plan to stretch the money throughout the semester. One of the best ways to develop a spending plan is to track expenses during the first few weeks of school. At the end of the first month, review with your child where and how they are spending their money. As a parent, you may want to make suggestions about how to change their spending habits.
- Remind your child about the difference between wants and needs. Help them prioritize their spending based on the needs, such as tuition, room, board, books prior to spending on wants.