Jun 16, 2021
An introductory personal finance course may not be on your childs course list, but its an essential material to learn. By instilling smart spending, saving, and budgeting habits before and during the college years, your child will be well prepared for long-term financial success.
The topic of finance is quite relevant for children. Many children are assigned papers on financial topics and are asked to write my papers. Thats why we offer to help your child start learning the following basics, and soon he or she will get an A+ in money management.
1. Show him how to create a simple college budget.
School supplies. Dorm snacks. Overnight pizza deliveries. Its easy for your child to spend money quickly. By setting a budget, hell better understand what he can and cant afford. Ask him to list all sources of income, such as financial aid or pay for work hes done. Then ask him to subtract expenses, such as tuition, books, and housing. (Your school may provide information on expected costs.) He can use whats left to save and save for other expenses. ) He can use whats leftover for savings and fun.
Encourage your child to take advantage of the digital assistance that exists in this area. There are many online budgeting tools and apps that can help. Some can display his actual spending and savings data, so hell have up-to-date information at his fingertips.
2. Help them get hands-on banking experience
If your student doesnt already have a checking account, help him open one. Hell get a taste of financial independence and learn how to manage a debit card responsibly. Find a bank with surcharge-free ATMs on or near campus so that you wont be charged out-of-network transaction fees. The bank may even offer a waiver of the monthly maintenance fee for students who qualify.
3. Encourage your child to download a banking app.
Most banks offer apps that allow customers to check account activity, monitor balances, deposit checks, and pay bills anytime, anywhere, which is ideal for busy college students. While navigating apps comes naturally to most young adults, some of the banking functions can be confusing. Review with your child what the app can do, and if theyre already in school, encourage them to go to a local branch or watch tutorial videos on YouTube.
4. Stress the benefits of establishing good credit.
Solid credit history makes it easier to get approved for essential things, like an apartment lease, a car loan, or a cell phone plan. But theres a catch: you usually need to have credit to get credit, so your student may need your help.
One option is to add him or her as an authorized user to your credit card account. In this case, your child can make purchases but is not committed to payments. You, as the primary account holder, are responsible for keeping the account current. However, you can still use this as an opportunity to teach your child essential spending habits. For example, your child can make purchases and then send you the agreed-upon payments.
Another option is for you to be a joint signer on your childs credit card account. He will be the primary account holder, but you are responsible for charges for any payments he does not make as a joint signer. A third option, which he can do independently, is to obtain a security deposit credit card, which requires a $200 to $500 security deposit. The deposit is usually equal to the credit limit, so theres no danger of overspending.
5. Share strategies for savvy credit card use
If your child is an authorized user on your account, set some ground rules for how the card will be used. For example, decide how much she can spend each month and whether she has to ask your permission before making a purchase.
If your student has his card, remind him that if he uses it irresponsibly, the effect on his credit score can be worse than having no credit history. In addition, if you are a joint signer, that misuse can affect your credit score. Emphasize the importance of controlled spending and paying the monthly bill on time. Suggest that she use the card for a small monthly expense, such as a subscription to a video streaming service. You can set up automatic payments to make sure the bill is paid on time each month.
6. Explain the benefits of account alerts.
Ask your child to sign up for email and text message notifications related to account balances, purchases, and payment due dates. These alerts will help avoid mistakes, such as overdrawing a checking account or making a late payment.
7. Carefully review how to send and receive money on mobile apps.
But digital payments dont have the same protections as credit cards. Ask your student to verify the recipients information to make sure the money goes to the right person. Also, advise him to send money only to those he knows and trusts. Finally, remind them that many small payments can drain their account quickly.
8. Emphasize the benefits of saving money
As your student gets older, saving becomes more important. Encourage him or her to start setting aside money now for emergencies and larger purchases he or she wants, such as a spring break trip or a new car. Putting at least a few dollars a month into a savings account can be beneficial in the long run and help him develop good financial habits.
9. Give her some smart spending tips
There are myriad ways students can cut costs. Among them:
10. Get advice on how to protect personal information.
Sharing housing and being careless with financial habits can make college students vulnerable to identity theft. Make sure your student knows how to use unique passwords, keeps them in a secure place, and changes them regularly.
Have them turn on all security features on their accounts. These can include biometric features, such as a fingerprint reader and two-factor authentication. (With two-factor authentication, youll need to enter a username and password, as well as other information, such as a code youll receive via text message or email, to access your account.)