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For many parents, sending a kid off to college is equal parts scary and exhilarating. There’s stuff to pack, dorm décor to buy, and orientations to attend. In the midst of all those preparations, there’s one item that deserves a spot at the top of the list: teaching your freshman how to manage their finances.
Even if you’ve helped your teen budget already, college presents a whole new set of challenges—and since you won’t be there to guide them, you’ll need to ensure they have the know-how to budget without your help. Here are a few ways you can get your collegiate started on the right financial foot.
Whether or not your teen already has a budget in place, it’s important to sit down and discuss finances. Map out their various streams of income, whether it’s money you’ll provide, income from a job, or financial aid. Then show them how to categorize expenses so they know where it’s all going.
That’s exactly what Tim did. Tim lives in Portland and is a single dad of three girls: two of them are currently in college and one is in high school. Before his two oldest daughters started their freshman year, he created a detailed budget for each of them. “I included the obvious school expenses, plus things they may not have considered like insurance and transportation,” he explained. “Then I reviewed it with them to make sure they understood what it all costs.”
Cathy McNear, an Umpqua Bank associate who’s also the mother of a 17-year-old boy, says there are many expenses that high school kids take for granted. “Everything from gas for a road trip to haircuts to even toothpaste—those are things that they’ll need to plan on paying for as college students.”
These days, it’s tough to get through college without accumulating some kind of debt—but there are things your student can do to minimize it. Naturally, college students shouldn’t use financial aid as an unlimited pizza fund, but temptation can be a powerful thing. Talk about the importance of using debt wisely, and encourage them to borrow only what’s required for things they really need. The more loans they take out now, the longer they’ll be paying them off later.
Many restaurants and services near college campuses offer discounts for students. Encourage your college kid to look for deals, especially on big-ticket items like textbooks. Many professors use the same textbooks year after year, which means used copies can be found at a fraction of the price. When the school year is done, suggest that your student sell their used textbooks to recoup some of the cash. That’s money that can go towards books the following year.
Unfortunately, freshmen are easy targets for credit card companies. These companies are banking on the fact that young students are strapped for cash—they also assume that parents (that’s you!) will bail their kid out if they run up a huge credit card bill.
Warn them against signing up for a student card on a whim, and shop around for a card with a great rate or perks that will benefit you both. “Say your kiddo is out of state and you want to fly them home for the holidays,” says Cathy, “then it might make sense to sign them up for a card that accumulates miles.”
Before your collegiate ever sets foot on campus, make sure they have a clear understanding of how much you’ll be contributing to their expenses—otherwise it could lead to an unpleasant surprise.
“I have some friends with a daughter who’s a freshman at Montana State,” said Cathy. “Within two weeks of starting school, she called to tell them she was out of money. Be really transparent about what you’re willing to cover and what they’re responsible for.”
Teaching your child to manage their money can be a delicate balance of freedom and consequences—and at times, you may have to stand back and let them learn the hard way.
While she was studying in New York, Tim’s eldest daughter relied on an ATM near her apartment that charged a hefty fee. Says Tim, “One month I tallied up her ATM fees and it came up to $45. I told her, ‘that’s money that you don’t have, and I don’t have.’ Now she avoids ATMs that charge fees and keeps a much closer eye on her bank balance.”
Cathy says they made sure to connect their son’s checking account to a savings account just in case he overdraws. “That way neither of us get hit with overdraft fees,” she explained.
If you’re on the account, you can check in from time to time, but let your student take the lead. Tim says he occasionally uses online banking to monitor the accounts he created for his daughters, although he tries not to. “I’m here to help, but I won’t stand over their shoulders,” he explained.
You and your college-aged child need the tools to budget together. Digital-savvy students will appreciate the convenience of being able to manage their money online. From paying bills to checking balances, online banking is a great way to help your student keep their finances on track. Take a few minutes to set up online banking for your collegiate, or come in to any Umpqua store and one of our associates will be happy do it.
Don’t have an account yet? Access Checking offers ATM fee rebates, e-statements and no minimum balance requirements, to help your busy college kid manage money on-the-go.
It’s never easy to send a child off to college—but teaching them to be financially responsible can make it a bit easier for both of you. Not only is it one less thing for you to worry about, it’s a life lesson they’ll benefit from long after graduation.