Poor money management in the early years of adult life can wreak havoc on credit causing high interest rates and higher insurance premiums in the long run. Many graduates face debt problems from their college days that may take years to recover from. Unwise spending can cost a lot more than the balance on the bill. Don't let your child fall into bad spending and borrowing habits that could get them into trouble.
When your child goes to college, you want them to be armed with the crucial knowledge that you may not have received when you where younger. Sit down and talk about finances before your child sets foot onto campus. Here are some ways that can help your child create a college student budget and manage money efficiently.
Although this may seem like a given, having a bank account is a staple in any budget plan. Having an account makes it easier to track spending versus holding onto tons of receipts. In the event of fire or theft, your child's money will be safe. There are many banks that offer interest-bearing savings and checking accounts which will allow your child's money to grow over time.
Setting future financial goals can help to institute better spending habits in the present. Making impulsive large purchases may feel good at the time, but can become a nightmare shortly thereafter. Encourage your child to live like a student in college so they don't have to live like a student after graduation! Remind your child not to try to be too flashy in the beginning of a college career. Encourage them to utilize all of the resources the campus has to offer. Instead of purchasing a car during college, have your child consider taking advantage of carpools, shuttles, and public transportation. Set a goal to get a car after graduation to give time to save up for a good down payment and maintenance. There is no better feeling than reaching goals and having a cushion in place when you need it.
hen in comes down to creating the actual budget, be as realistic as possible. College students can easily fall prey to needless spending, especially when there isn't enough money allotted in the budget for everyday expenses. Take the time to sit with your child and teach them how to evaluate what will be coming in and what will be going out. Budgeting may seem hard even for the most prudent individuals, but the payoff is well worth the effort. Be creative and come up with money saving ways for your child to enjoy favorite things like making coffee in the morning instead of purchasing it at the coffee house. Use coupons for groceries instead of ordering out all the time to minimize food costs. Buy snacks in bulk instead of spending the inflated prices of vending machines. Use this college student budget calculator to help you prioritize your child's funds effortlessly.
When it comes to loans, the misconception of free money is a trend among the young minds of college students. Placing large amounts of money in the hands of a young adult can spell trouble without the proper financial education. Let your child know that this money will have to be paid back with interest. Make sure they understand what their monthly payment will be after graduation before they commit to signing for the loan. It's vital that only what is necessary is borrowed. Advise your child to research the starting salary of their intended career based on location and determine how much is okay to borrow based on their expected salary. This will be a good indicator of what type of loan payment they will be able to afford and how much is too much to borrow.