Your child is heading off to college and you want to make sure he’s well equipped to handle his newfound freedom and responsibilities. Here are 5 tips to help your freshman start school on the right financial foot.
Work on a Budget with Your Child
A good way to start a financial discussion with your student is to make a budget that maps out any college income and expenses. For income, include money you’ll provide, income from a job, and any student loans, grants and other types of financial aid money that will be available. For expenses jot down rent, utilities, groceries, entertainment, dining, books and miscellaneous expenses. Teach your college freshman how to categorize these costs so he has a good understanding of what his money is being spent on, and what can be afforded given his income.
Chances are your child will overspend now and again thanks to his newfound freedom. As an experienced budgeter and parent, make sure to impart some smart money choices based on your child’s preferences and habits. If your kid loves going to concerts and other big social events, mention how he can have those experiences at college for less, like attending free outdoor concerts, watching a free film night at the school union, and going to city-sponsored and student run events, instead of buying tickets for The Lumineers.
Try organizing your student’s finances on a budgeting app to show him how to handle money. Your kid can keep using the app while he’s away.
Discuss Unexpected Costs
There are variety of college costs for a new student to consider. Tuition and housing are expenses you and your child can plan for in advance, but other expenses like books, supplies, student organizations and clubs, travel expenses, meal-plans, eating out, and entertainment on and around campus are variable. Help your student explore ways to keep expenses low by:
- Finding Part-Time Work – Your new college student may scoff at taking a job in college. But a quick explanation about how much money he could earn might change his mind quickly. For example, working a job for just 10 hours per week at $10/hour, over the 9 month period he’s at school, would earn your kid $4,000 per year. In four years that’s $16,000 in gross income.
- Utilizing Student Discounts – Many local businesses and services near your new freshman’s college campus will offer student discounts that can help him save during the first year. You can also find many online retailers that offer such discounts, including Apple, Amazon and Microsoft.
Encourage Applications for Scholarships and Grants
Encourage your child to apply for grants and scholarships. Make sure he fills out the Free Application for Student Aid (FAFSA) each year he’s in school. The federal government will use the information on the form to determine whether or not your child will need financial aid. Some sites allow your kid to be matched with thousands of scholarship opportunities. The more applications your freshman submits, the better the chance he has to get one. You should also emphasize that getting good grades in college may lead to academic scholarships from the school he attends. Some schools offer grants to students in certain majors too.
Minimize Student Debt
If your child needs to take out student loans, make sure to talk to him about how to spend the amount borrowed. The money received isn’t free and should be for school items ONLY – tuition, housing, books and food plans. It should not be used to fund a party lifestyle on campus. Teaching kids to use their student loans for books instead of kegs will help curb temptation and prevent them from paying interest on purchases that aren’t necessary. Although student loans aren’t really due until after graduation, let your child know he can start paying them down while in school. Taking a part-time job is a great way to reduce debt and minimize long-term interest payments.
Advise Identity Protection
It’s a good idea to remind your student to keep an eye on his personal and financial information, and take precautions to prevent fraud. If someone steals your child’s credit card or other sensitive information, it can create months of financial problems. To help prevent this, suggest he do a few things:
- Review bank accounts – Your student should get in the habit of checking his online banking accounts regularly to look for any unauthorized transactions. Report any suspicious activity immediately.
- Monitor credit – Have your child sign up for a free credit monitoring service to keep track of the information on his credit reports. If something looks off, it should be reported immediately.
- Safeguard important information – Finally, remind your child not to give out information easily. Your student must be careful when sharing sensitive information like a credit card number or Social Security number to pay for things online or setting up an account. Tell him to always use secure sites and never to make purchases on public wifi.