Twenty one years ago I was on the verge of starting my college adventure in Boston. Sharing summer memories with high school friends and shopping for my freshman dorm were at the top of my priority list. I was ready – at least so I thought.
I quickly realized in my first few weeks that my new home carried a lot more responsibility than I had expected. Sure, there was the need to go to class, study, go to my job and make smart decisions socially – these did not come as a surprise. It was the little every day decisions that presented some challenges, especially since I did not have the same checks and balances as I did at home. At age 18, like most college students I was faced with so many options with how to spend money – going out to eat with friends, going to parties and dorm fundraisers, T and cab fares, admission fees, late night pizza, T-shirts, BC gear, fun outfits for theme parties, supplies, the list goes on. There were a lot of kids like me who needed to work through their college experience but there were also many kids who had access to what seemed like an unlimited source of outside funds. One thing was clear, this was a very new reality.
If you have a child heading off to college this fall, consider prepping them for some of their financial decisions they might face.
Go to class
Break down the cost of tuition per class and help them relate that to an expense they are familiar with – maybe a family vacation or piece of furniture. It is important they they understand the money that is being thrown away by simply not going to class.
Minimize and Structure Credit Card Use
Today is very different than when I went to college. There are options with protections that will help a student learn how to use a credit card. Still it is helpful to review with your child why they should not open a credit card without first having a conversation with you first.
Pay Bills on Time
One of the most common ways that college students damage their credit is by simply not paying their bills. Discuss with your child how not paying your bills on time can create credit issues that will follow them after graduation.
Budget Spending Money
Little purchases add up quickly. Help your child set up a monthly budget and consider having them check in with you about their spending as early as the first month. This may seem like you are exerting too much control on their new independence but this is the very beginning of a long road ahead. It is important that your child has the tools and understands how to manage all of the choices they have around spending money.
This is important for your child at so many levels including his/her finances. They are going to be faced with so many financial backgrounds. It is normal to want similar things or want to keep up. This however can lead to spending money on things that do not bring your child much value and/or can create debt issues for them and even you. In addition to setting the expectation that your child will face these tough decisions, also point them in the direction of where they can get involved or work to help them structure their time in a positive way.
The college experiece is a major life experience. The decisions outside the classroom are just as important as the decisions made in the classroom. Help your child be financially prepared so they can be centered on discovering and developing their positive path forward.
Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered by Concentric Private Wealth®.
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Advisory services offered through Commonwealth Financial Network®, Registered Investment Advisor.
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