5 money tips for college students - WBRC FOX6 News - Birmingham, AL

5 money tips for college students

Source: Raycom Media Source: Raycom Media

Soon thousands of young adults will head to college, many for the first time.  As parents, what is it that you hope they’ll learn from the college experience?  Personally, I ‘rolled’ into college, through college, and out of college without giving the whole process much thought.  Fortunately, once I graduated and got a job, I taught myself money management and investing but it was an ugly process filled with costly mistakes.  What if you could use your child’s college experience to give him or her a head start on mastering the skill of money management?  Here are 5 tips for providing your child a personal finance education:

  • Co-build a budget.  Sit down with your child and together work through a budget for the school year.  You’ll want to plan out the entire year including college and summer.  To help you get started download our Budget for College Students under ‘Links’ in the Resource Center of www.WelchGroup.com.  
  • Give them the money.  Set up a joint account with your child so that you can monitor their spending but fund it either monthly or quarterly based on the budget you’ve established.  They’ll now be responsible for paying all the bills, including tuition, room, board, books and discretionary spending.  If you want them to have a credit card, start with a debit card and make sure they track all debit card purchases in the checkbook register along with checks written while keeping a running total of their checking account balance.  An excellent free Internet resource is www.Mint.com
  • Be a good coach.  Think of what you admire most about your favorite coach (in any field).  Their number one characteristic is probably not criticism.  It’s more likely to be encouragement and support.  You’ll want to monitor your child’s progress closely in the beginning.  In my experience, it takes two years to become a master budgeter so give your child a break and help them up when they stumble.
  • Let them help.  In my experience working with families for over thirty years, children who helped pay for college have a much greater appreciation for their education than those who got a full free ride.  Consider having them work part time or summers to save money for part of college costs.  This may be as simple as empowering them to earn their ‘spending’ money while you fund the basic costs of college.  I worked as a grader during the school year plus summer jobs.  These experiences better prepared me for ‘the real world’ after college.  One way to ‘earn’ money is to get a scholarship.  There are thousands available, some just for the asking.  Visit the Resource Center at www.WelchGroup.com; click on ‘Links’; then click on ‘College Scholarship Search Engine’.  If they do have earnings during college, consider ‘matching’ a portion of those earnings with a Roth IRA contribution.  This will give you an opportunity to begin their investment education.
  • Help them set goals.  In a decades-long Harvard study, the 4% of graduates who consistently set goals later created ten times the wealth than the remaining graduates combined!  College goals might include building an emergency reserve, finishing college debt free, building a savings account or saving for a college abroad program.

Don’t be surprised if this turns out to be the most important part of their college education or that you learn something useful too!

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC and WELCH INVESTMENTS, LLC, which specialize in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of 100 Tips for Creating a Champagne Retirement on a Shoestring Budget;  J.K. Lasser's New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site www.welchgroup.com.  Consult your financial advisor before acting on comments in this article.  The preceding is a re-print of a prior article.

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