College students will learn everything from psychology to anthropology, philosophy to statistics. The one area of study that often slips through the cracks is personal finance. Whether you’ve got a freshman or a senior, it’s never too early or too late to start instilling financial basics. Here are 13 financial tips for college students that will help your kid build the foundation for a stable future.
1. Check their credit report
Even if you don’t think your college student has a credit history, now’s the time to start checking credit regularly. That way errors can be corrected by the time they’re ready to apply for a credit card or a car loan. Go through the report together so your child understands its meaning and importance.
2. Look for fee-free college checking
Many banks waive fees when you keep a minimum amount in your account, but most college students won’t meet that minimum. Instead, look for a fee-free college checking account. Make sure the bank you choose has ATMs conveniently located near your child’s college. Otherwise, you may negate the fee-free checking with ATM fees.
3. Avoid overdraft fees
College students are notorious for racking up overdraft fees. Overdraft protection will keep your purchase from being declined, but it means you pay a hefty fee later on. Opt out of overdraft protection or link the checking account to a savings account. Have your student set up text alerts so they know when their account has hit a low balance.
4. Make sure they see financial statements
If your child does have a checking account or credit card (or uses one of yours), make sure they see the statements. Every time they get a statement they should reconcile it against their spending. Plus, it’s important they see how those dollars can add up and what interest can do in the long run.
5. Keeping financial information secure
Some things are best kept secret and that definitely includes personal financial information like pin numbers and social security numbers. Have a talk with your child about the importance of keeping those numbers to themselves and filing away bank statements rather than leaving them around the dorm.
6. Are they ready for a credit card?
Building a credit history is important, but many 18 year olds simply aren’t ready for the responsibility. Anyone under 21 must have an adult cosigner or show proof of independent income. Start with a checking account and when they’ve shown they can manage money responsibly, you may consider a credit card.
7. Start with small payments
There are ways you can start building a credit history without letting your young adult run amuck. One strategy is to open up a card and set it up to pay for small, recurring payments (like their Netflix subscription and gym membership). That way they can start building a credit history but keep the credit card safely at home.
8. Start them budgeting early on
Establish clear rules about what you’ll pay for and what’s their responsibility. If they have a student meal plan, they really don’t need a ton of grocery money. If you’re paying for groceries, give them a set amount and leave it to them to make it last throughout the month.
9. Talk about wants versus needs
Students may want to go to Florida for spring break but they’ll need to buy textbooks for spring semester. Help college students understand the importance of paying for your needs first and then seeing what disposable income is left for the fun stuff.
10. Start turning over expenses
It can be a major reality check to go from having zero expenses to dozens upon graduating. Periodically turn certain bills over to them so they can get used to the responsibility of meeting monthly expenses. Even if it’s just a $10 monthly gas bill, it will get them used to making monthly payments on time.
11. Teach them the power of compound interest
Saving for retirement is definitely not the first thing on a college student’s mind, but the sooner they start saving, the more they can take advantage of compound interest. Use an interest calculator to show them just how much that $1,000 from graduation could become by the time they’re 65.
12. Beware of door-to-door scams
College students often think they’re invincible and scammers know it. Some target college towns and send peers door-to-door selling fake magazine subscriptions or raising money for a fake cause. Make sure your child goes to college equipped with some scammer street smarts.
13. Don’t offer an endless amount of bailouts
It’s hard to watch your child struggle when it would be so easy to come to their rescue. But if you bail them out every time they get in a little financial trouble then they’ll likely never learn. If they rack up bank fees or credit card debt, help guide them in the right direction or come up with a payment plan, but don’t automatically clean up the mess every time.