So your child is a high school senior and is going off to college next year. That is great that you are paying for their college experience. Now I have a question for you? Are you paying to give them a good start in the business world or are you paying for one big party? Some children have a good idea why they are going to college. However some think that they are going on a big adventure on your dime. Many don’t have a clue when it comes to budgeting, how to use checking/savings accounts, or how to use credit cards.
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Many are shocked when they find out how much things cost. In college many first find out how much taxes comes out of their small paychecks. So you better prepare them for what they have to deal with next year in college.
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Help your child understand their personal financial situation.
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1. After each semester, check your child’s grades before paying for the next semester. You don’t want to pay for 4 to 6 years of schooling just to find out that they never attended class. You be surprise how many parents I talked to, that worked two jobs just to put their children through college, find out that they never attended. Can you sing “Maggie”? In the end, they found out that all they did was pay for them to go to all night parties and play on the beach all day.
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Some parents remortgaged their homes and practically told their children to have fun on the house. I can hear you now, “Not my good little child!” I want to see your face as your Home Line of Credit drives off to college and does not return.
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2. Set spending priorities for them and stick to them. Many children do not have experience managing their money. They have no idea how much living expenses are. Many think “so what! When I need money I will just go ask Mom or dad for it.” Your job is to teach them how to live independently. It is not to teach them to be dependent on you. In the very beginning, create a budget together with them.
Start by discussing practical living costs with them. If they live in a dorm, let them know how much it cost. If they lives in an apartment, let them know how much it cost in rent, utilities, phone, internet, cable, and any other expenses. Make sure they know what bills they are responsible for and when they are due.
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3. Teach your children checking and savings responsibilities early. Take them to a bank on campus and have them open an automatic checking/savings account. If you can, use a bank that has no ATM fees or has ATM access near campus to avoid fees. Show them the basics of maintaining a checking account register and reviewing a statement. With online banking, you both can monitor their account regularly. Show your child how to set up and use automatic bill paying whenever you can.
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Your children will probably go on spring break with their friends so show them how to save up the money so that they can go without coming to you to foot the bill. Remember college is for education including financial education. It is not a vacation finance by you the parents. Give your child a bi-weekly or monthly draw from their account rather than a large lump sum. It is easier to manage.
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4. Use a credit card only when absolutely necessary, such as for emergency roadside assistance. This is where most children do what they can do to destroy their future before they get out of college. Most businesses today will not hire you if you have several DUIs, criminal record, or have a bad credit history. You can be at the top of your class and come from the best college but if you have a bad credit rating, corporations will not hire you. Make sure you tell your children this.
Help them shop for the best credit card. Shop for a card that matches the needs of your child. Show them how important it is to create a high credit rating.
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5. Buy used books and keep them in good shape to resell. Your child can
reduce the cost of books for college by buying used books and selling them.
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reduce the cost of books for college by buying used books and selling them.
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6. Take advantage of an on-campus meal plan. Colleges and Universities have meal programs. These programs may be easier to manage in your budget and more nutritionist than paying for junk food from fast food businesses.
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7. Use monthly discounted transportation passes, if available. Most cities have discount transportation for students. Instead of using a car that is expensive to operate, use public transportation.
Diablo Valley College in Pleasant Hill, California
Also keep in mind that going to a local community college then going on to a local 4 year college or university is the least expensive way for your children to get an education. That is because they will still be living at home. Here is where you have to decide, what is more important, a low budget education or a college living experience?
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