College is a wonderful time for young adults. It’s a time where they have new freedoms, new friends, and an exposure to new ideas and career paths. They are also exposed to many decisions that have consequences.
In addition to receiving an abundance of credit card offers, they also have to determine how to support themselves and pay for college. It can be a difficult and stressful time. You can help alleviate the stress and help them make better decisions by teaching your child about financial responsibility.
The Decisions
There are many decisions a child has to make, including where to go to school, how to help pay for their school and how to manage their money. It requires several conversations. The first conversation should be when they’re applying to schools.
Discuss the benefits of choosing a school that is less expensive. It can be tempting to attend a big name school or a private school because they carry a brand name that is alluring. However, at the end of it all, those big name schools offer little additional value when it comes to building a career and a life. Studies have shown that the job prospects are essentially the same. But the debt is more with a pricey school.
Other decisions include if they’re going to work while they’re in school and how to best manage their income and expenses. Credit card companies love college students and it’s easy for children to graduate from college with both student loan debt and credit card debt. It’s important to talk to your child about these issues before they are on their own. Work out a budget with them and discuss the pitfalls of credit card debt.
Things to Consider
Help your child open a bank account where they’ll be going to school. Many universities offer credit unions which can offer low-fee banking and good interest rates. Additionally, help them create an emergency fund that they can use for unexpected events. This emergency fund helps prevent them from turning to credit.
Finally, guide them to identify and utilize campus and financial resources. While it’s important to help educate your child about financial responsibility, it’s just as important to teach them to fend for themselves. Help them locate the best tools and financial learning resources. This helps them learn more about financial responsibility as well as teaches them to become more independent.
