One extracurricular activity that every student can master while in college is personal money management. Typically, a student’s daily spending is done on an improvised basis, meaning that overspending is often the norm rather than the exception. A number of necessary, but unexpected expenses, can throw accounts off-balance right at the start…
Money Smarts 101
- Have an open discussion of mutual expectations regarding finances. Set up a virtual platform so you can both review cash-flow together.
- This is a great use of Powwow’s spending tool via a membership plan.
- Consider providing a lump sum each semester if there is an unavoidable cash-flow deficit. Make sure this is possible within your own financial plan.
- Set guidelines on how long the sum must last and how it should be used.
- Come to an agreement on how part-time job employment income should be utilized.
- Is it critical it be saved for future loan repayment?
- Is it needed to cover ongoing fixed expenses?
- Is it their fun money?
- Get savvy right away about how to minimize expenses.
- Books can often be bought second-hand and immediately re-sold at the conclusion of the semester.
- Entertainment subscription services can be shared among roommates.
- Pull a credit report every quarter to make sure everything looks good. I recommend CreditKarma.com.
Lastly, where accounts are kept is also an important consideration. Many undergraduates tend to have an account at their small hometown bank or credit union. However, managing personal finances long-distance can create challenges. Make sure your child has an account with flexible banking:
- No ATM fees
- Ability to easily transfer funds
- Low foreign exchange fees (for study abroad)
- Online bill-pay
- Mobile check deposit
- Free Debit Cards and Checks
- Ability to add beneficiary designations
- Cash-rewards credit card that links to savings (a plus)
While some parents may hesitate to promote the use of credit cards, however, they’re a great way to start building credit if used responsibly. Credit cards are also helpful in an emergency or for certain big-ticket expenses that may not time well for cash-flow (plane tickets).