It’s graduation season. As high school students everywhere are celebrating their new found independence, parents of these students are worrying whether or not their graduates know enough to survive college.
In a perfect world, parents teach their students what they need to know about finances over the course of eighteen years. However, if you’re just now realizing that your soon-to-be college student doesn’t have the financial know-ho to get by on his own, there’s hope.
Make the most of the summer to teach your child what she needs to know before heading off into the real world. That said, what does she need to know?
Maybe you don’t have time to teach your child the detailed ins and outs of budgeting. If you drill this one idea into your child’s head, though, he will be OK. That idea is spend less than you earn. This simple idea means your student needs to know two things.
As a college student, your child may not have a regular income. Whether he has a job with a weekly paycheck, scholarships that are paid out quarterly, or a stipend from mom and dad that he receives monthly, your student needs to know his income.
Then he needs to track his expenses, making sure they do not exceed his income. Teach him to save a little bit for emergencies. Be prepared for a rough start and some mistakes, but if your college student learns this one lesson, he will be way ahead of many college graduates!
Let’s face is. Checks are quickly becoming outdated. With the advent of debit cards and electronic transactions, it’s rare that one needs to write a check anymore. However, there are still a few occasions when checks are the only way to go.
Make sure your college student has access to a checkbook through his bank account and knows how to write a check. Just as important, make sure he knows to record the check and balance the checkbook, so he’s not surprised when a forgotten check clears!
In addition, your student should know how to void a check, as he may need to present a voided check to his employer for direct deposit.
There are many fabulous programs on the market to help manage a budget and bank account. If you have time over the summer to teach your college student how to master one of these programs, great! But at the very minimum, your student should know how to reconcile his bank account, use online banking to check up on pending and cleared transactions, and what to do if there is a mistake on his bank statement.
Also educate your student on the different fees banks charge. You don’t want your college student to overdraft his account, because he didn’t calculate ATM fees correctly!
And most importantly, teach him that if he has a question about his bank account, it’s OK to call you or the bank for help. We all need a little guidance sometimes.
If there’s one thing that gets college students in trouble, it’s the improper use of credit. Whether the student takes out too many student loans or racks up a credit card balance, graduating from college deep in debt can have a negative impact on a young adult for years to come.
Parents, if you teach your children one thing in the summer before college (or preferably sooner), teach your children to respect credit.
Just because your daughter’s favorite store offers 15% off that day’s purchase for opening a credit card doesn’t mean it’s a good idea. Explain that taking on debt and paying it back over the long term will eventually cost more than the 15% she saved in one day. One lesson I didn’t understand before college was that just because I could afford the monthly credit card payment didn’t mean I could afford the purchase. Make sure your student understands this.
Teach your child to use a credit card responsibly, if at all. Teach her to pay off the balance every month and that if she can’t pay off the balance one month, she needs to stop using the card. The momentary pain of being broke and passing up a purchase is a lot better than the long term pain of paying off a purchase you made five years ago at twice the price.
College is a time of learning to be an adult. As a parent, you can expect your young adults to make plenty of mistakes, even with good preparation. If you take time to prepare your student in these four areas, though, chances are that your child’s mistakes will be minor, with only short term repercussions.
Am I missing anything? At a minimum, what do you think young adults should know about finances before heading off to college?
Photo by Wikimedia Commons.
If you like this article, please sign up for free weekly email updates.
I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.