Although you (unfortunately) won’t find most college students studying about personal finance, during these important college years it is extremely important that students learn about personal finance because, once college is over, they’re definitely going to need it.
In most cases, college is the very first time that a young adult is given the responsibility to manage their own money. Also, the way a young adult actually makes and manages their money while in college is usually a pattern that they follow into adulthood.
Many students get themselves into financial problems during college because they’re not ready and don’t know the ins and outs of personal finance. It’s with this in mind that we’ve put together today’s blog because, while college can also be quite a blast, the fact is that many students graduate up to their ears in debt. That’s not a great way to start out your career and the tips and advice below should help you to avoid it. Enjoy.
The first place to start is with a personal checking and savings account that will also give them access to ATM machines using a debit card. For most young adults this is a huge step towards financial independence. It also comes with the task of learning about many basic financial terms and ideas. How to deposit money, how to avoid overdrawing an account and how compound interest works can all be easily learned with just these basic accounts. It’s also a great way to learn about online banking, especially since this is the way most banking will be performed in the future.
No discussion about personal finance tips for college students would be complete without talking about credit cards. The cold, hard truth is that credit card companies have a nasty (but profitable for them) habit of offering credit cards to students, knowing full well that these same students will more than likely overspend, go into debt and have to pay lots of interest fees that the credit card companies then profit from. Simply put, most college students have yet to master the finer points of using, and not abusing, credit cards. In our opinion it would be a great idea to talk to your college kids about credit card debt before they manage to amass their own. Having a ton of credit card debt already on their shoulders when they graduate college is not a good idea whatsoever.
Before they even had off to their first class, talking frankly to your child about student loans is an excellent idea. The fact is, it’s way too easy for students to overlook the fact that they’re going into tremendous debt for college when all they have to do is sign a few papers once or twice a year and money magically appears to pay for their studies, books and so forth. College students need to realize that they are going to be responsible for paying back these huge loans and, until they do, interest is going to accrue that will make them even bigger. As a parent, if you struggled for years to pay off your student loans you may want to discuss this with your kids and tell them how unpleasant it was. They may still need the loans, but it may spur them to work part-time while in college so that they can take out less college loans and graduate with much less to pay off.
Most parents can’t have an intelligent conversation with their college students about budgets because they don’t have one themselves. If that’s you, you may want to enlist the help of someone who is familiar with using budgets so that your child will learn how to use them as well. The fact is, creating and then managing a budget isn’t something that the average person inherently knows how to do. If you, as a parent, don’t know how to do it you should definitely find someone that does to educate your child because budgeting is one of the best ways to accumulate wealth, keep the debt to a minimum and retire wealthy. (For that matter, if you’re not using a budget it’s definitely time to start.)
Here’s the thing; learning about personal finance is difficult at any age but, for a college student, being able to understand the concepts of personal finance and also being able to apply those concepts can be a game changer. Simply put, the choices that a college student makes as far as their finances can have long-term and far-reaching effects long after they’ve received their degree.
If you’re a parent of a college student or you are in college as we speak, the information presented here has hopefully opened your eyes to a number of important factors that every student should know. You’re already in college so now is the best time to learn about these things and, once you graduate, you’ll need them because (hopefully) you’ll land an excellent job once college is done and be prepared to handle your money like a pro.