College can be a great time of discovery and learning for teenagers. That said, one of the most important lessons for college students is how to properly manage their money. It’s a good idea for parents to ensure their kids head off to college with financial knowledge that will help them for decades to come.
Start Saving for Retirement ASAP
Because they haven’t yet gotten their first “grownup” job, the farthest thing from a college student’s mind is retirement. Parents creeping up on retirement age themselves know all too well the importance of saving for their golden years as early as possible. That’s why it’s a good idea for college students to open up a Roth IRA. More importantly, parents should teach their kids about compound interest. The earlier they start saving, the more they can accrue in interest over the years.
Learn How To Fine-Tune Budgeting
While budgeting doesn’t seem too complicated, it’s something that can take a while to truly perfect. That’s why parents should give their college-bound kids a crash course in learning how to make a budget. Budgets should include several different categories, sources of income, due dates, and whether the amount is the same from month to month. Students should know that it’s okay for them to tweak their budget, especially if the initial iteration isn’t working for whatever reason. Spending habits, income, financial goals, and more can change over the years, necessitating a need for a brand-new budget.
Write Down Who’s Paying for What
As kids go off to college to learn how to be more independent, they may also be expected to be more financially independent. Parents should let their kids know what they’ll pay for and what their kids will cover themselves while in college. For instance, mom and dad may pay for tuition, books, and class fees, but the college-bound teen may have to cover meals, bills, gas, and car insurance. This goes a long way in preventing confusion and even frustration when a son or daughter phones home wondering why she or he isn’t getting spending money from mom and dad.
Make Use of Finance Apps
There’s no doubting that teenagers spend a lot of time on their phones. Parents can use this to their advantage and have their teenaged son or daughter download a few helpful finance apps that teach them healthy money habits, help them understand how to use money wisely, and guide them on saving money. For instance, downloading a simple coupon or cashback app helps college students realize how much they could be overspending on everyday items. Even better, such apps can teach college students lessons even their parents, peers, or teachers may not be aware of. It’s so easy to save money and learn how to save money these days that no one has an excuse for not doing better about their finances.
Teach Them How To Use Credit Cards
Credit cards and college almost go hand in hand. Before students open up a credit account for the first time, they should understand exactly what they’re getting into. Besides taking advantage of “check your free credit score” offers, students should also learn the importance of paying credit cards off in full before billing periods are up, how interest can be more trouble than it’s worth (at least, when you’re paying interest), and why credit cards should be a measure of last resort rather than an initial option. College students should come home with laundry (that they wash themselves), not a mountain of credit card debt.
Consider Part-Time Employment
Depending on a student’s schedule, she or he may not have the time or mental energy necessary to hold down a job while attending classes. For the best results, it may be a good idea for teens to focus 100% on school for their freshman year of college. After they get a feel for classes and studying, they may find they can at least hold down a summer job or a job on-campus. They may also look into making money on their own terms. The great thing about working in college is that students can better financially support themselves and gain more agency.
Take Advantage of Student Discounts
Just as there are senior citizen discounts, there are also student discounts. Everything from local restaurants and movie theatres to museums offer student discounts. That said, the only way to find out about said discounts may be to ask. Parents should teach their kids to ask about such discounts before purchasing anything in their college town or city. Anything.
Learn the Difference Between “Want” and “Need”
There are bound to be times when college students have to make a hard choice between two or more purchases. When that happens, they need to be able to tell the difference between something they need and something they just want. For instance, they may want to dine out rather than cook, but also need to pay their phone bill to avoid late fees. The wise decision is to pick up a few ingredients from the grocery store to make several meals rather than spend that same amount of money on a single meal.
It’s easy to inadvertently develop horrible money habits, and it can be even harder to break those habits. That’s why parents should do what they can to prevent their college-aged kids from developing such habits in the first place.