College is for learning and the undergrad years will teach real-life lessons about financial planning but experience can be a tough teacher. No matter what you’ve done in preparation, perhaps the college student in your life has already called (or texted) home to ask for money. As your college student is settling in and starting to live a life he or she only imagined before, this may be a good time to make certain your student is prepared for the financial realities of life in school and beyond.
Washington Post financial columnist Michelle Singletary offers some tips for parents and college students:
Establishing credit: You may have heard that college is the time to get a credit card and build a good credit history but proceed with caution. Singletary recommends that first-year students hold off on getting a credit card, perhaps waiting until they are closer to graduation to get a credit card.
Accepting excess student loan money: A student loan refund may seem like easy money but your child has to learn sooner rather than later that even free things come at a price. In this case, the money received now as a refund will incur interest that must be paid back later.
Feeling entitled: Many of us feel that we have a right to or deserve certain things even when we don’t have the money for them. For college students, Singletary writes, “Leave at home the attitude of having to experience everything.” She goes after something that many college students view as a rite of passage: a spring break trip. Strictly from a financial viewpoint (leaving aside concerns about wild partying), the costs of such a trip may be too high.
If helping a college student deal with finances has you thinking about how you can better manage your own, contact a Fee-Only financial planner. It is easier to set an example if you practice what you preach.