Parents, if you’re like me, you realize that many things about college have changed since your coed days. College is big business. It’s not like the old days. Back then, if you had a pulse and a checkbook, you were accepted. Today, college is much more competitive. And expensive. That’s true for tuition and room and board, but it’s also true about incidentals. University sweatshirts, Chipotle burritos and double caramel macchiato lattes can add up in a hurry.
If you’ve got a soon-to-be college student, now’s the time to discuss money matters—specifically responsible day-to-day money management. Students’ spending decisions today can have potentially huge consequences on their lives after college.
To begin, get a realistic picture of what your child currently understands about money and spending. Does your student know how to balance a checkbook? Does she grasp how interest adds up over time? Can he manage a simple budget? Don’t just assume they understand budgets, credit cards, interest, or investments. Unless you’ve already taught these things, your student likely doesn’t know them.
“Teach your kids how to handle money or they will live in your basement forever.” -Dave Ramsay
Parents and students often have very different expectations on financial management. Considering we have different ideas about almost everything throughout the teenage years, it shouldn’t be a shocker! In general, young people often focus on short-term finances, as in, “How can I afford a new dress for the formal next weekend?” Parents, on the other hand, think about long-term, big-picture situations, such as, “How will she ever repay the student loans she’s racking up?”
Perhaps your child lives up these generalizations, or perhaps he doesn’t. Now’s the time to find out. Has your student worn out the magnetic strip on his debit card from frequent swiping? Or is his hand permanently curled from gripping his first dollar? Does your daughter’s pulse race when she sees a Sale sign in the window of Anthropologie? Or has she squirreled away enough babysitting money to pay for a study-abroad semester in Paris?
Understanding your student’s financial perspective will be helpful as you move forward. Ask some open-ended questions about finances and review a few of their recent bank statements to get a clearer picture on where they stand in relation to saving and spending. This will help you determine if you can confirm your child is on a healthy financial track or if you need to address some red-flag behaviors that could lead to future financial trouble.
Communication is key in helping your college student learn how to manage money during the college years.
For more detailed, practical advice on setting your college student up for financial success (along with other valuable parenting strategies), order your copy of Out to Sea: A Parents’ Survival Guide to the Freshman Voyage today!