You Become Financially Fit Before Leaving for College
With half of the academic year at an end, college-bound high school seniors are setting their sights on how their life will change as they graduate, move into student housing and live "on their own." And while their focus may be on how to manage this new-found freedom, now is the perfect time for parents to start preparing their teens to succeed at the fundamentals of personal finance.
Living away from home for the first time, can be filled with opportunities and temptations to overspend and get buried in credit card debt that can lead to long-term financial peril. Learning early on how to take control of their finances can save first-year college students a great deal of money.
While there is countless advice on how to be a financially savvy student, taking it all in at once can be a bit overwhelming. Share the following five tips with your teens to help them establish healthy financial habits and avoid unnecessary debt burdens that can haunt them long after graduation.
Save money
If you don't already have a savings account, open one now, before you leave for college. Get into the habit of saving money while you're in your teens and early 20s. This will be valuable in the event you need money for an emergency. Plus, it helps to establish a pattern of saving for the long-term.
Maintain a budget
Before you leave home in the fall, understand how much money you will need each month for living expenses and any extras. Then, keep track of everything you spend. If you find it is difficult to stay within your limits, review where you have spent your money. Remember, little purchases can add up quickly, so you may need to rethink decisions like eating out, daily lattes and impulse purchases. This doesn't mean you'll never be able to splurge on something special, you just have to prioritize and determine what is most important with the funds you have to get you through the month.
Look for bargains
On-campus life offers benefits for students in the form of cafeteria meal plans, reduced prices for used books or book rentals, and student discounts for event tickets, transportation, food and other services.
Avoid unnecessary fees and fines
Make sure you're aware of limits and fees related to campus resources, as well as class materials, organizational dues and living expenses. Fines on overdue library books, parking violations and late housing payments, along with fees for a banking account and ATM usage, can add up quickly.
Limit credit
As a college freshman, the credit card companies will target you with the opportunity to sign up for one of their cards. Before you do, make sure you understand the credit limit, interest charges, any annual fees and penalty fees before you fill out the application. The interest from carrying a high balance and late fees will quickly add up.