College can be both a very exciting time and yet a very stressful time for both students and their parents. A lot of this stress stems from being away from home and on your own for the first time, pressure to do well in classes, interacting with new and unfamiliar people and more often than not, financial struggles. Preparing your child by educating them on proper financial habits can help lighten the financial load felt by many college students. Sharing your financial knowledge can give them a head start with future financial success. The following tips can help bolster your child’s financial success:
Open a well-chosen checking account – A checking account is a necessity every college student should have. However, it is important to evaluate some key points before you decide on which account to choose. Some of the questions you may want to ask yourself are what types of transactions you will be making such as writing checks, paying bills online or withdrawing from ATM’s. Then consider how many of these transactions you will be making monthly. The answer to these questions will determine what type of checking account you should open and the amount of fees you will be charged monthly. There are so many types of checking accounts offered now, each with their own special features and perks, that it should be easy to find one that is the right fit for you that offers low or no fees.
Chose a debit card over a credit card – This causes you to make purchase for those things that you have the money in the bank to pay for and not run up ridiculous amounts of debt that you may have to struggle to pay back in the future. The drawback of the debit card is the greater ease with which a scammer can obtain your information and use your card as their own. To minimize this risk, make sure to be aware of the people around you when entering card information such as the number, billing address and PIN number.
Balance your accounts – Make sure to routinely balance your checking account. This is now easier than ever with the computer software available which will practically do it for you. This will also alert you to any activity on your account that was not made by you.
Create a workable budget – Upon entering college, take all your expenses and income and create a budget worksheet. Determine whether you are able to make ends meet or if things have to be adjusted through either increasing income or reducing expenses. The goal is to have money left over after expenses are paid.
Use credit wisely – Most college students find they have a need for a credit card for one reason or another. This reason should not be to buy items that are not necessities that you do not have the cash for. If this is the case, when the card comes due, the funds to pay it off are usually not available which leads to interest charges that increase the overall balance of the card putting you further in debt. If you find it necessary to have a credit card, use it for essential purchases only, keep track of these purchases and pay the amount owed in full at the end of every billing cycle to avoid unwanted interest charges. Also be sure to carefully examine your credit card statements to make sure all of the purchases were authorized by you and immediately report any suspicious activity to the credit card company.
Using these tips will give the college students a better grasp on their financial well-being. This is more important than ever because unlike in the past, parents, for the most part, are unable to assist their children to the extent they were able to before because of various changes in the economy and personal financial conditions. For example, not long ago, parents were able to open credit card accounts in their child’s name in order for them to gain some financial independence. This practice is now prohibited and requires and adult co-signer or the personal financial status to afford the account independently.
Parents are often leery of co-signing for their child in fear of damaging their own credit, or are unable to qualify as an eligible co-signer to begin with. One of the few options left for parents are to provide the students with prepaid debit cards with the drawbacks of usage fees and limited acceptance. The burden of financial responsibility of college is shifting to the student which makes it more important than ever for them to understand how to be financially responsible from the start. On average, the college graduate leaves school with several thousand dollars in debt distributed across several varying accounts and approximately $50,000 in college loan debt.