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Setting up your College student for Financial SuccessSubmitted by Paul B. Miller, CFP on June 11th, 2018
As parents, there is no greater satisfaction than helping your children achieve a solid education. Attending college sets them on a path toward a future in which they can provide for themselves and make wise financial choices along the way. However, no college student is going to learn these things on their own. Parenting does not end at morals and manners. Setting up your college student for a successful life includes helping them navigate financial issues. Those who receive financial guidance and advice while in college are better prepared to handle their finances in the real world.
If you are sending a child off to college, here are a few steps you can follow to help them wrap their mind around financial responsibility while they are still in school. Those lessons will benefit them immensely when they enter the real world after graduation.
Create a Budget
This is the first step any individual should take toward financial success, not just college students. However, a budget is particularly wise for college students because their finances are going to be tight while they are in school. Sit down with your college student and help them lay out a list of common expenses, look through housing options at school, and discuss meal plan options. Beyond these factors, do not ignore the recurring costs of school supplies (notebooks, pens, pencils, textbooks, etc.) and furniture. Peak inside of most dorm rooms and you will not find the latest trends in furniture and bedding. Teach your college student the value of thrifty shopping when their budget is minimal. The Washington Post lays out the value of making a budget and sticking to it.
Separate Wants and Needs
This is a mistake that college students and adults alike make with money. The moment people feel wealthy is often the moment they fail to separate their wants from their needs. It is a good idea to help your college student understand the importance of saving money for the things they want rather than buying them right away just to satisfy a desire. Impulse purchases can lead to financial ruin, and in many cases, it is a slow-drip process that people do not see occurring until it is too late to reverse the damage to their credit score and financial standing.
Build a Credit Score
Even though the Huffington Post notes that college students should enter the world of credit "at their own risk," it is a good idea to help your student start building a positive credit score now. You can lend a hand by adding them to your credit card to help them take the first steps in establishing a credit history. Reinforce in their minds the importance of spending wisely, not exceeding their budgeted allowances, and always paying bills in full, on time. This will help establish a fresh credit score in youth that is positive, rather than one that is marked by a series of poor financial choices.
Explore Student Loans and Financial Aid
Lastly, help your college student learn about available student loans and financial aid. Few children head off to college with a war chest of funds to pay for tuition, room & board, textbooks, and entertainment for four years of schooling. Help them understand all these common expenses that come with a college education and then show them how to sign up for different loans and scholarships.
For more help saving for college or for budget plans, call your advisor at Indian River Financials.