College Bound-Financial Checklist
Summer is a great time of celebration for high school seniors, but should also include time preparing them to transition into adulthood. For many, college will be the first time they will experience living away from home and the independence of managing their own finances. Here are just a few concepts every teenager should be familiar with:
Bank Accounts – Not all accounts are equal. Be sure to compare maintenance fees, minimum balances and ATM availability. Teach them how to write a check.
Credit vs Debit Card – Debit cards pull directly from a checking account, while credit card purchases are essentially small loans you must pay back with interest. Responsible credit card use can build a solid credit history that will be necessary down the road when renting an apartment or purchasing a car. Education about the differences of each and the importance of keeping debt to a minimum, by paying balances off on time and in full each month, is critical for a good credit score.
Develop good money habits by having them create a Spending Plan to manage expenses. Don’t just deposit money for the semester/year without providing somewhat of a framework of how the money should be spent. The Cardinal Rule here should be “Spend less than you earn.”
Time Value of Money – If there is any earned income, encourage them to start saving now. The habit of saving, even if just a few dollars a month, will serve them well for many years to come.
Attend a Personal Financial Course – These classes can often be found with local community education programs or as a freshman course in college.
Identity Theft – Teach them to safeguard personal information and keep tabs on suspicious activity.
Employment – For many families, student loan debt is a reality to finance higher education. The pros and cons of taking on a job while also carrying a full course load should be carefully considered. While it can be a great way to reduce your student debt, gain valuable job experience and learn time management skills, it could also interfere with academic progress if someone isn’t disciplined enough with juggling school and work commitments.
Regardless of where the money comes from, living within their means may not be the popular choice but will teach them the difference between wants and needs.
“College Bound-Financial Checklist” was published in the August 2018 issue of Life on the Green magazine, a social publication for the residents surrounding The Woodlands, Country Club, Player Course, where Dan is a resident and is a featured monthly contributor.