College students will make hundreds of financial decisions that impact their day-to-day life and financial wellness for years to come. Gaining skills for managing money can help.
By keeping some basics in mind, your student can get off to a good start, which can carry them through college, and set them on the right financial path as they graduate.
You may want to help your student take the following steps. And while there's no bad time to take these steps, they might best be done proactively, in an effort to set a positive course and prevent problems.
Set a budget: Determine how much financial aid your student will receive, how much you will contribute and explain that money must last over the academic year. Students should make a plan to pace their spending. Tools like CashCourse’s Budget Wizard can help. Don’t under-estimate casual spending, because unplanned events, going out with friends, and conveniences such as Lyft can add up quickly. Needs and wants can be difficult to identify when confronted with split-second spending decisions. A strong plan will help guide those choices.
Track their spending. Consistent and clear recording of spending is key. Some students prefer apps or spreadsheets like mint.com or vertex42.com, and others record expenditures on paper. Check actual spending against the budget to stay on track.
Set SMART financial goals: Write down goals with your student and make them SMART, that is, Specific, Measurable, Attainable, Realistic and Time-bound. Also setting micro-goals of less than four weeks can help students stay on track.
Choose a bank or credit union: Compare two or three financial institutions, considering location, accessibility, online features and member benefits. Students should know the difference between debit cards and credit cards, which are different. Personal savings accounts can be used to encourage students to pay themselves first with any income they earn. The secret to saving is to start!
Get familiar with credit reports. Everyone's credit is ranked based on their credit-worthiness, including students who are just beginning to handle credit and pay bills. To build good credit, be sure to pay bills on time, every time. Visit annualcreditreport.com to check reports for free annually and learn more about credit.
A financially savvy student understands why and how to make personal financial choices, and they also see how those choices fit into the larger picture. They practice those choices daily, and they can help others in their families and their communities to cultivate financial wellness.
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