We have included links to advice sites on our Money Matters site, but here are a few specific pieces of advice:
- Make sure your expectations are clear. Who is paying for what? If the student runs out of money on their meal plan, will you put more money on it or is it up to the student?
- Sit down and plan out a month by month (or week by week) budget.
- Make certain that your student knows simple things--- like how much it costs to be overdrawn at the bank! They should also understand that even if their debit card is accepted, it doesn't necessarily mean they have money on the account.
- While giving a student an entire semester's worth of spending money may seem like a way to get your student to budget, it is often not wise. Students who have been frugal in high school may suddenly feel "rich" when they see large amounts of money in their checking account.
- You may have explained credit cards to your student, but it doesn't hurt to do it again. Sit down and show them specifically how much interest the student will pay and how long it will take to pay off a bill if they just pay the minimum. Sometimes using a specific example helps---if you use a credit card to buy a $50 pair of shoes and continue to pay interest on it for a year or two-how much does that pair of shoes really cost.
- The same thing can be said for student loans. While many students have to take out loans, they should understand how long it can take to pay them back and how that might affect buying a car, a house, etc. Students can see loans as "free money," like credit cards, and take out more than they absolutely need. Realizing how much they will pay in the long run may encourage them to graduate in a timely fashion or to take out a slightly smaller loan.
- Make sure that your student knows it is o.k. to come to you if they have made a financial blunder or need advice. While they should be held accountable, often parents can help them resolve problems more quickly and get them back on the right track. Hiding financial issues can only make them worse.