Parents, let's talk college finances
Parents, how many of these financial lessons did your college student learn from you?
- Keep track of your money so you know you’re not spending more than you have.
- Never carry a balance on a credit card.
- Save some of your money for a rainy day.
- Shop around for the best price.
- Before you buy something significant. sleep on it.
- Plan ahead.
Talking with your child about college, early and often, is a big factor in preparing for the academic and social aspects of college. Experts recommend that parents take this same approach when it comes to the financial aspects of college.
Do you talk to your college student about financial matters? Choose one of the following answers:
- Yes, we talk once every month or so.
- Yes, we talk once or twice each year.
- Yes, when something unexpected comes up.
- No, I take care of the finances so my student can focus on studies.
If you talk once a month or even once a year, congratulations! You are setting your student up for success. But what if you never talk about finances, or only when something goes wrong? You may find your child has developed some risky financial habits. Those might include late or missed payments ,or credit card debt. Here are some tips to get a regular conversation going with your college student about finances:
- Ask "what" and "how" questions that don't mention money at first, but lead to a discussion about budgeting, smart shopping, and planning ahead. For example, ask "What kind of meals do you eat at school?” or “How do you find time to study and still see your friends?”
- Share a topical news story or Facebook post. For example, say “I saw a Facebook post about a college student who used Kickstarter to pay off student loans. How does that work?”
- Teach each other. Have your child show you how to download and use a mobile banking app such as mint.com while you explain the content.
If you don’t think your student listens to you, think again! He or she will listen to you when you set clear expectations about responsible responsible financial behaviors. How many of the following financial practices do you expect your student to follow?
- Track expenses.
- Spend within a budget.
- Pay bills on time.
- Save money.
- Learn about money management via internet, seminars, books, or classes.
Responsible financial behaviors evolve with experience. That’s why we call them financial practices. A $35 overdraft fee for a burger with friends is an opportunity to talk about the value of tracking expenses. The sting of a parking ticket or increase in student fees is an invitation to talk about saving money to handle the unexpected. A rejected lease application demonstrates the impact of not paying bills on time. When your expectations don’t match the reality of your student’s behavior, consider these teachable moments.
Expecting the unexpected
Life is filled with unexpected and unplanned expenses, and college students are not exempt. Parking tickets, library fines, phone, laptop,and car repairs — all these are just a few of the financial ups and downs of college life.
Talk with college students about how to handle unexpected financial problems before they occur. Also show them how to plan ahead to manage financial ups and downs. This will help them make better decisions when they're away from home.
Bucciol, Alessandro, & Veronesi. M. (2014). Teaching children to save: What is the best strategy for lifetime savings?
Jorgensen, B. L., & Savla, J. (2010). Financial literacy of young adults: The importance of parental socialization.
Serido, J., Shim, S., Mishra, A., & Tang, C. (2010). Financial parenting, financial coping behaviors, and well-being of emerging adults.