By Nat Sillin You’ve worked to train your children in money management, but college brings a whole new level of financial decision-making and challenges. So before they are off on their own, review these topics to make sure they’re ready. Start with what college costs. On average, the Class of 2015 graduated with a little over $35,000 in student loan debt. Depending on your financial situation and how you’ve planned for your teens’ college education, it might make sense to begin with an overview of your financial commitment to their education and what their financial responsibilities will likely be once they graduate. It’s also a good opportunity to reinforce how attention to money matters during school and the right choice of major can position college-bound students for a much stronger financial start when they graduate. Train them to budget. If your children haven’t learned budgeting skills, it’s time for a crash course. Budgeting is the first essential skill in personal finance. Teaching kids how to budget now will give them a head start on dealing with post-graduation debt or long-term goals like affording a home or car. Budgeting teaches how to balance immediate money goals against long-term objectives, and they can do it on paper, on a computer or via mobile apps. Discuss on-campus banking and credit needs. Many parents start their kids with custodial savings and checking accounts at their local bank when they’re younger. If your bank has branches in a student’s college town, that relationship can easily continue. Responsible credit card use is also wise to start in college. Keep in mind that The Credit Card Accountability, Responsibility and Disclosure (or Credit CARD) Act of 2009 requires that anyone under 21 without independent income have a co-signer to qualify for a card. As such, you’ll be able to keep track of your kids’ credit use while they’re away. However, if they default, you’ll be on the hook – so monitor your child’s bank and credit relationships closely until you agree they’re ready to manage them on their own. Teach teens about credit monitoring and identity theft. Students need to understand their credit reports for two main reasons – to make sure they’re maintaining good credit they’ll need in adulthood and to keep a steady watch for fraud. With smarter online thieves emerging every day, your children can be at risk of falling victim to identity theft from the minute they are assigned a Social Security number. While most teens generally don’t have a credit report until they start earning a paycheck, be on the lookout for fraudulent activity earlier and make sure your kids get in the habit of ordering their three free credit reports each year. Throughout college, consider sitting down with your children so you can review their annual credit reports together. Encourage bargain shopping. Students should learn to comparison-shop for everything from textbooks to food and clothing long before they leave for campus. The College Board estimates that the average student spends around $1,200 a year on books and supplies alone and should be on the lookout for bargains, coupons and opportune times to buy, rent or borrow to keep spending down. It’s also a wise idea to encourage children to buy used whenever possible and for them to ask if there’s a student discount where they shop. Share outside expertise if you can. Consider letting your children work directly on tax, savings and investment issues before they leave for college so they’ll have a better awareness of all their financial issues. If you work with specific tax or financial advisors, consider paying for an advisory session or two. For example, working college students might want to open an IRA to get a jump on retirement or invest in a 529 college savings plan to save for graduate school. Exposing children to good outside advice about their personal financial circumstances and goals can yield benefits later. Bottom line: Getting a college-bound freshman ready for campus should go beyond registering for class and setting up their dorm room. Use their final weeks at home to talk about important budgeting, savings, spending and even investing issues that will yield dividends in adulthood. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. Nathaniel Sillin is the Head of Global Financial Literacy at Visa Inc. and runs the company’s financial literacy program in the United States, which includes the award-winning Practical Money Skills for Life and What’s My Score programs. As part of his work at Visa, Sillin is a frequent public speaker and an active voice in the financial literacy community. Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.
Thursday September 3, 2015/