College is a time for your student to gain independence. Learning 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.
Encourage your student to explore the following tips. And while there's no bad time to apply these tips, they might best be done proactively, in an effort to set a positive course and prevent problems.
Develop a budget: Your student can determine how much financial aid they will receive, how much you will contribute and make a plan to ensure the money lasts over the academic year. Encourage your student to pace their spending. Tools like CashCourse’s Budget Wizard can help. Talk with your student about 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. Encourage your student to check actual spending against their budget to stay on track.
Set SMART financial goals: Have your student develop goals and make them SMART, that is, Specific, Measurable, Attainable, Realistic and Time-bound around their spending and/or saving. Help them plan ahead for big purchases such as trips or a new laptop. 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, guide your student to be sure they pay bills on time, every time. Have them 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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