As the summer draws to a close, high school graduates (and their sobbing parents) begin to prepare for college.
Among all of the packing and scheduling, it is important to also take a look at how each student will afford their new lifestyle.
Tuition is not the only large-scale financial concern for college students year in and year out. It is equally important for college students – and perhaps more so for the parents who are paying for their schooling – to consider their personal spending options.
Having enough money to pay bills, buy books, and even to eat is extremely important as these things are not just necessities for the way of college life, but having sufficient funds equates to less stress in the long run.
Of course, there are many ways to go about planning a budget for new college students and each of these options will depend on where the money is coming from. Some students plan to work, at least, part time to earn some discretionary income. Others will have earned placements with work-study programs or internships within their field of study.
Some may be on scholarship and cannot work and others simply will have an agreement with mom and dad. Of course, some will depend on a combination of these; but the bottom line is that you need to have a plan in place.
Credit-Land Editor-In-Chief, Michael Germanovsky, says that learning to respect credit is a very important part of life. Also the founder of the Student Credit Card Education Initiative, Germanovsky also says,
Parents may have an instinct to protect their children from what they see as the big bad world of credit, but it’s important for students to learn how to use credit wisely so they don’t get into trouble later in life. The sooner kids start learning about responsible credit use, the better.
The key here, of course, is learning, but how do parents go about teaching their children about money management? Fortunately, there are a few tools available for people at every level of experience:
- Prepaid cards allow parents the most control and they are also extremely efficient. They can load money onto the card so that the student has a set number of dollars. This is ideal for young people who simply need money to buy books or to help pay for regular monthly expenses that are easy to track. This is also the best way to help teach someone who is new to credit about responsible spending without risking any big trouble. However, the lack of risk also implies that there is no true education about responsible credit management since no one is required to make a schedule payment.
- Debit cards are great for students who have, at the very least, a part time job and a bank or checking account. The card can be linked to their account so they can spend at will without having to visit the bank to get cash. They also allow for online transactions. It is best to not give a student a debit attached to the parental account, just in case they get into some trouble. While you, as a parent, want to help, you are no good to your college student if you can’t afford your rent either.
- Credit cards are a big risk to students but they can also be extremely powerful tools for responsible young people. Some credit cards claim to be designed for students with no credit history but it is important for parents to read the fine print regarding the interest rates and penalties. Of course, a student who can properly manage a credit card will be that much further ahead in the near future when they want to rent an apartment or purchase their first car or home.
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