Giving Your College Student The Financial Tools They Need
As the school year begins, many parents are sending their new or returning college students off to dorms and campus apartments, where they may have more financial responsibility than ever before. Are they prepared? Here are a few tips to help make sure they are ready to manage their finances with confidence.
The days of banking in person are pretty much gone. Especially for students moving away for college, they'll have little to no need to go into a bank. But they should have a checking and savings account, with a debit card, before heading off to school. Make sure they know how to log in to their account and understand the importance of checking it regularly.
For many students, budgeting is a new responsibility when they head off to college. Sitting down with them and helping them create a realistic budget that accounts for bills can be eye-opening. Help them create a spreadsheet they can continue to use while away at college. Don't forget to talk to them about the importance of building a savings account. Also, encourage and teach college students about being thrifty shoppers, using off-brands, coupons, and buying things like school supplies when they see them on sale, instead of waiting until the last minute.
CREDIT CARD DEBT
Many college students are under the impression that having some debt will help them build credit. But once they get a credit card, they frequently overspend and find themselves in debt. Over one-third of college students have at least $1,000 in debt. Building credit does not have to be by using a credit card. But if they have one, remind them to pay it off in full each month.
All AFI members have free Identity Theft Advocacy Services through CyberScout to include tips on keeping your identity safe, how to detect fraud, and timely information on topics such as cyber threats, data breaches, and tax fraud. When you become an AFI member, your children are automatically members for life.
In 2019 the outstanding student loan debt hit an all-time high of $1.41 trillion. Over half of college students graduate with some student loan debt. The decision to consider student loans is a hard one, but one that each family should make for themselves. Students should understand the different types of student loans, their interest rates, and their repayment requirements. Encourage them to seek your advice before deciding to take out a student loan in the future so that you can weigh all of the pros and cons together.
Are your college student's belongings protected while they are off at college? Renter insurance can protect your child's electronics, furniture, and other belongings from theft, loss, or damage while they are off at college. Contact your AFI agent today to see if your coverage includes them, or if they might need a separate policy.
College is an excellent time for students to learn how to live on their own, including managing their finances. By laying a foundation earlier in life and knowing they have their parents to look to for advice, they'll be better prepared for the real world.