Money Matters: Lessons Your Child Should Know Before Leaving for College
Updated: Oct 6, 2022
Many parents drop off their students at college in late summer and early fall. For some students, this may be their first time living away from their parents. For others, this may be year two or three. Either way, college students are returning to managing their money without the immediate safety net of mom and dad. Unfortunately, knowing this fact usually causes parents to stress and worry.
Hopefully, you have had the opportunity to provide your kids with some money managing experience, like living on an allowance. Maybe they will even be familiar with managing their checking account and using their debit card. And perhaps they know all about comparison shopping and looking for the best deals.
Either way, having conversations with your kids about money matters is essential. Sometimes, multiple conversations may be needed as parents think of other areas of concern. However, before the talks, begin by asking and reflecting on some important questions:
What expenses will you cover?
What costs will your student cover?
How much money will you provide?
How often will you provide money?
Those questions may spark some ideas of topics to cover with your students. Based on my experiences both as a college student and as a parent of students in college, I have compiled five conversation topics to think about discussing with your students as they head out for college.
Budgets and Learning to Stick to them - Structure is important. Most people do better with structure; knowing how much money is coming into your checking account and how much we spend is imperative. Many handy apps and online tools help students with this issue. However, if those are not desired, a simple spreadsheet is enough. The idea is for your student to learn to live within their means and to stay within their budget.
Establish Credit but Don’t Go into Debt - It is a good idea for your student to build credit. However, they must understand not to use credit cards to incur unnecessary expenses. Maybe even create a list of what can be charged or what constitutes an emergency.
Checking Account Basics - Make sure your student knows they should monitor their account to ensure all the transactions are legitimate and that they are not overdrawing their account. Overdrafts are costly, so decide if those costs will come at their expense or yours. Perhaps they can sign up for email and text alerts that make monitoring easier. Lastly, ensure your student understands bank account passwords and PINs are not to be shared with roommates and significant others.
Part-Time Jobs are Important - A part-time job provides students with a lot of structure and additional income. Most students have five to ten hours a week to devote to a part-time job. It may also help students have work experience to add to their resumes.
Your students Are NOT a Bank - In this day and age, students usually designate one student to pay for the group’s dinner meal or event, and then the rest of the group will Venmo, Zelle, or CashAp their portion of the cost to one who paid the bill. That is not a problem until it is a problem. Have the conversation with your students that they should not always be the person footing the bill and how to approach their friends if they keep forgetting to pay their portion. Remind them they are in college and cannot be everyone else’s bank.