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Five financial tips your college freshman needs to know

In the next few weeks, several thousand college freshmen will be arriving on campus excited to start the next chapter in their life. An often overlooked aspect of this new life is the financial wisdom needed for this new found freed.  Following are five tips for parents to share with their college bound children.
What’s the starting point for college financial wisdom?
Start with a simple weekly spending plan or mini budget.  Have your child setup an automatic weekly transfer into their checking account from their savings so that they don’t have more money available than their allotted budget for the week.  Easy access to cash is one of the major culprits in overspending.
How can they avoid going over their budget on the first day of the week?
There are two actions that can really help prevent them from going over their spending limit.  First ask them to have a think before spend limit of $50.  This means any expense over $50 they will wait 48 hours before making the purchase.  The second rule is not to have more than 5 transactions per week.  Limiting your number of transactions per week easy an easy method to help stay on budget.
What is one financial area that students can get tripped up on easily?
Fees related to their checking, especially overdraft or NSF fees, is one of the biggest problems for college students.  The best way to avoid this is to find an institution that offers technology such as text alerts, a mobile app and other tools to keep them informed of their checking account balance. Tools like these are invaluable in keeping students up to date with financial matters during a busy college semester.
What about a credit card, is it a good idea to have one as a college student?
Yes it is as long as it comes with limitations. Building good credit in college will be very helpful upon graduation.  And credit cards are sometimes needed for certain purchases and provide an added layer of protection above and beyond other payment methods.  Many credit cards offer added benefits too that a college freshman might find useful.
What can be the downfall of having a credit card as college student?
The biggest issue is there is less restraint on the spending because of the limits that are potentially available.   Opt for a small limit of $1,000 to $2,000 and have them only use it for one time expenses like books or other items that can be paid off monthly. This avoids the problem of racking up enormous credit cards bills. Teaching responsible use of credit early is a significant life skill every young adult needs to learn.
Are there any other concerns to address for college students?
One that many people don’t think about is fraud and theft. College campuses can be very open places so keeping financial information in a secure place is very important. Often times these issues are a result of opportunity rather than intent. It is not that the campus is full of people looking to do bad, rather they are tempted by an opportunity that is presented.
What advice would you give to students on how to protect themselves from this?
Don’t leave money, gift cards or account information laying around their room.  Lock their door when they leave the room, don’t leave their backpack unattended and always use a secure wifi network when using online banking. Just a few preventive efforts and a little awareness is all that is needed to address this issue.

Posted: 8/13/2015 with 0 comments

Categories: College, Money Matters, Students

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