10 personal finance tips for your college student
Personal Finance 101 may not be on your child’s course list, but it’s vital material to learn. If you instill smart spending, saving and budgeting habits before and during the college years, they’ll be well prepped for long-term ﬁnancial success.
Help your child to tackle the basics below, and they’ll soon earn an A+ in money management.
Show them how to create a college-friendly budget
School supplies. Dorm room snacks. Late-night pizza runs. It’s easy for your child to blow through cash quickly. By setting up a budget, they’ll better understand what they can—and can’t—aﬀord. Ask them to list all income sources, such as ﬁnancial aid or pay from a side hustle. Then have him subtract expenses, such as tuition, books and housing. (Their school may be able to provide information on expected costs.) What’s leﬅ over can be used for savings and fun stuﬀ.
Encourage your teen to tap into digital assistance in this area. There are many online budgeting tools and applications that can help him. Some can pull his actual spending and saving data, so they’ll have up-to-date information at their ﬁngertips.
Help them get hands-on banking experience
If your student doesn’t already have a checking account, help them open one. They’ll get a sense of ﬁnancial independence and learn how to responsibly manage a debit card. Find a bank that has no-fee ATMs on or near campus so they won’t get hit with out-of-network transaction fees. The bank may even oﬀer a monthly maintenance fee waiver for eligible students.
Encourage your child to download a banking app
Most banks oﬀer apps that let customers check account activity, monitor balances, deposit checks and pay bills at any time and from any place, which is ideal for busy college students. While navigating apps is second nature for most young adults, some of the banking functions can be confusing. Review with your child what the app can do, and if they are already at school, encourage them to go to a local branch or check out YouTube videos for a tutorial.
Stress the beneﬁts of establishing good credit
A strong credit history makes it easier to get approval for important items, such as an apartment lease, a car loan or a cellphone plan. But there’s a catch: You typically need credit to get credit, so your student may need your help. One option is for you to add them to your own credit card account as an authorized user. In this case, your child can make purchases, but they’re not on the hook for the payments. You, as the primary account holder, are responsible for keeping the account in good standing. However, you can still use this as an opportunity to teach your child important spending habits. For instance, your child can make purchases and then send agreed-upon payments to you. Another option is for you to be a cosigner on your child's credit card account. They'll be the primary account holder, but as a cosigner, you're liable for any charges they don't make payments on. A third choice—which they can do independently—is to get a secured credit card, which requires a deposit of about $200 to $500 as collateral. The deposit often matches the credit limit, so there’s no danger of excessive overspending.
Share strategies for smart credit card use
If your child is an authorized user on your account, set some ground rules for how the card is to be used. Decide how much they are allowed to spend each month and if they have to ask your permission before making a purchase. If your student has their own card, let them know that if they use it unwisely, the effect on their credit score can be worse than having no credit history. If you're a cosigner, that misuse can affect your credit score. Emphasize the importance of controlled spending and paying the monthly bill on time. Suggest that they use the card for one small monthly expense, such as a subscription to a video-streaming service. They can set up automatic payments to ensure that the bill is paid on time each month. If they’re an authorized user on your card, keep a close eye on their spending. If you’re a cosigner, ask for their account login so you can periodically check their activity.
Explain the advantages of account alerts
Encourage your child to sign up for text and push notifications related to account balances, purchases and payment due dates and even unusual activity. These alerts will help prevent slip-ups, such as overdrawing a checking account or making a late payment.
Review how to send and receive money in mobile apps wisely
Zelle® and Venmo make it fast and easy to split expenses such as the cost of restaurant bills, ride-sharing tabs, food deliveries and rent. But digital payments don’t have the same protections as credit cards. Ask your student to double-check recipient information to ensure that the money is going to the right person. Also, caution them to send money only to those they know and trust. Remind them that many small payments can quickly drain their account.
Emphasize the benefits of saving money
As your student gets older, saving becomes more important. Urge them to start putting money away now for emergencies and bigger-ticket dream purchases, such as a spring break trip or a new car. Contributing even a few dollars a month to a savings account can pay off down the road and help develop good financial habits.
Offer some savvy spending tips
There are myriad ways students can trim costs. Among them:
- Think twice before choosing a meal plan. It’s common for students to skip dining hall meals in favor of eating out.
- Ask about student discounts before making any purchases. Big savings can be had on computers, cellphone plans, museum admissions and more.
- Check out student-focused apps that highlight deals and exclusive offers.
Provide guidance on how to safeguard personal information
Shared living spaces and lax financial habits can make college students vulnerable to fraud and identity theft. Make sure your student knows to use unique passwords, keep them secret and regularly change them.
Ask them to activate all security features on their accounts. These can include biometric capabilities, such as a fingerprint reader or facial recognition, and two-factor authentication. (With two-factor authentication, they’ll need to enter a username and password to enter a username and password as well as another piece of information— such as a code they receive via text or email—to access their account.) Also, tell your child to give their Social Security number only to trusted sources.
Help them to avoid scams too. Advise them to never give out personal information or passcodes—a bank will never call to ask for these—and resist pressure to act immediately if someone reaches out asking them to transfer money.
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