Lets face it, many of your students have no clue about basic finance. Math is taught in school but there typically are no classes that cover the basics of life like paying the bills on time, how interest works, balancing the check book etc.
There are a few things that parents should cover with your students before they go off to college.
- Credit will be plentiful so credit cards should be discussed in depth. When taking my son and daughter to college I distinctly remember already seeing tables set up by on campus banks/credit card issuers offering new students easy credit. What many students don’t realize is that if the bill isn’t paid in full each month interest will accrue very fast. In many cases cards are charging 16, 17 and up to 18% or more. Overdue balances can multiply very quickly. It’s important that your students have a card available for emergencies, but credit shouldn’t be used for anything they can’t pay for in full when the bill comes due. Prior to college, students should work with their parents to learn how to read a credit card statement, use a budget to prevent card balance overages, and develop responsible money management.
- Did they receive any scholarship money? If so, great! However, students need to know the requirements for maintaining any scholarship money being received and what the minimum grade point average is in order to stay actively enrolled in college. A part time job may be necessary, but students should understand how many college courses can be taken and completed while maintaining the part-time job. Unfortunately, many students take on too many courses while working long hours to the detriment of their college grade. Flunking college courses increases the time in school and the money needed to accomplish the primary goal of getting a degree.
- If your students parents can give them money each month that is great, but the student should know what their budget is and keep track of those expenses each month. There is nothing worse than getting notice that the checking account was overextended and a check or checks bounced due to insufficient funds. There will then be some very high bank fees attached as well. They need to learn how to balance a checkbook and their parents should help them understand how that works BEFORE they go off to college. Learning to reconcile a bank statement is essential to practicing sound financial methods.
- It is also important to have conversations about identity theft, credit card fraud and bogus emails requesting personal information. If students have never been exposed to these possibilities, they could be easily duped. Explaining how thieves can steal personal information and the consequences of trying to clean up a stolen identity may impress upon students that their personal information should be carefully guarded. Keeping passwords and computers private can prevent problems before they begin.
These quick tips can at least help start the conversation and get them thinking about the future when mom and dad will not be there to help them do everything.