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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 a few of the important tips your college aged children need to know.
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 is an easy method to help stay on budget.
What advice should parents give to their kids when it comes to managing their accounts?
The most important priority is managing their balances and not spending more money than they have in their accounts. It is probably not realistic for kids to really actively manage their checking account balance so encourage active use of text and email alerts for balances and transactions. The most helpful alert is a fall below balance alert, that way students know when they are getting low on funds in their account.
What are some of the most overlooked savings opportunities by students?
Without question, it is taking advantage of discounts and comparison shopping. As a college student, there are several student discounts available and offers for coupons on everything from pizza to school supplies. Most students shop in the moment and don’t think to see if the price is lower somewhere else, they just want to buy it and be done.
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
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 to avoid building a mountain of debt. 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.

Posted: 8/11/2016 with 0 comments

Categories: College, Kids and Money, Money Matters, Students

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