Back to School Money Talk for College Freshmen – The toughest adjustments college students are often money related. Incoming college freshmen are often ill-prepared to deal with expenses and money management.
Bank of Ann Arbor has provided useful tips for helping your son or daughter’s journey to college an easier one when it comes to finances.
Back to School Money Talk for College Freshmen Tips
Help your college freshman work on a budget – Budgeting goals and priorities change over time. If your child had a part-time job while he or she was in high school, the priority was probably to build a savings. A college student’s main priority is not likely to be savings, but rather to figure out how to make saved money last all semester or until summer. Parents can help a student itemize and prioritize all the things the student will have to purchase such as clothing and sundries, textbooks, the expenses of a car or cell phone.
Plan for mistakes, and let your student correct them – No matter how good the student’s budget is, mistakes are going to happen. Some of them are minor, such as when a student simply forgets to budget for working fewer hours at a part-time job during a week of exams or having to take an unpaid sick day. If that happens, a little help from mom or dad may be appropriate. But sometimes mistakes are major, the result of overspending and under-earning, and the student runs out of money before the end of first semester. In this case, as difficult as it may be, do not bail out your student. Help him find a way to fix the problem. If the student lives on campus and you paid for a meal plan, he is not going to starve. He might have to find a way to work a few more hours, or be sure to earn a few bucks during semester break.
Talk to your college freshman about the dangers of credit cards – and how many credit card companies entice students to open accounts. Show your student how long it will take to pay off even a small amount of debt. Even a small balance of $3,000 can take as long as 10 years to pay off, and during that time the borrower would have paid more than $2,200 in interest alone. Student loans, car loans and eventually mortgages are often considered good debt. But credit cards in the hands of inexperienced users can be disastrous.
Let your college freshman know you will be checking on their finances – From time to time, check your student’s bank balance. Look at the expenditures and deposits, and make sure she is on-track to making his money last until he comes home for the summer. As time passes and the student gets better at handling money, you will be able to let her handle it without your help at all.
Tips provided by Pamela Audette, Senior Vice President of Bank of Birmingham. Bank of Birmingham, a full-service community bank in Birmingham, Michigan, founded in 2006, to provide competitively priced banking services and products that meet the needs of individuals and businesses by listening, advocating and delivering banking solutions. More information can be found at Bank of Ann Arbor.
For more back to school money talk tips, Bank of Ann Arbor.