You know what it's like to be a college-bound student – let's face it, not too long ago you were sitting in the same position as your teenager is now. But things have changed since your college heyday, from technology to the economy. For instance, according to CNN, the average college student carries about $27,000 in student loan debt these days and, according to the Better Business Bureau, the average American adult carries $10,000 in credit card debt.
Aside from the cost of college itself, there are the intangibles like book prices, food costs and money for entertainment. Needless to say, a college-bound student's spending habits can get out of control quickly. So, to help curb such habits and make sure students don't need to go to these extremes to pay off debt, here's a look at five tips:
We already shared the humbling statistic about the average American's credit card debt; this often begins during college. A credit card is something your college-bound student should have in case of emergencies. However, warning your student about the dangers of letting spending habits get out of control is essential. Because interest rates are so steep, tell your student never to charge something they know they can't immediately pay off.
Identity Theft Protection
Another thing you didn't have to worry about in your college days was identity theft. Today, it's easier to steal or intercept credit card information, as well as make fraudulent purchases in your student’s name. For instance, it's oftentimes a family member, friend or co-worker who swipes your student’s credit card numbers. Help your student build good safeguarding habits, like cross-shredding credit card statements and locking sensitive documents.
Set a Budget
Sit down with your college-bound student and set a realistic budget for all the expenses he/she can expect to incur. Have your student log expenses and stick to a budgeting plan that you both create. Even an app like Mint can integrate with a bank account and help your student know if they're on track with their budget. Proper planning and preparation is the key to managing money. At the same time, don't open up your wallet to your teen, but assist them in dealing with the funds they already have.
You don't have to listen hard to hear the groans of students come the start of every semester when they have to stomach the large markups on books and class materials. Don't let your teen fall into this trap, and halve the cost of books and course materials by purchasing them as used or online from sites like Amazon.com. To take advantage of this, act prior to the day class begins. Also, at the end of semester, sell your books back to the bookstore to recoup some of the costs.
Finally, using common sense and planning logistically is a huge money saving tip. For instance, open a banking account with a branch that exists on the campus your teen will be attending; this helps them save on ATM fees, which can add up after awhile. And make sure your teen knows his boundaries. For instance, based on his budget, it might be impractical to purchase both football and basketball season tickets.
Failure to follow these lessons can result in consequences including bad credit, bankruptcy and a deep financial hole to pull themselves out of.