Life Stages - College Students (For Parents)

When your child goes off to college gone are the days of doling out daily lunch and snack money. Now is the time to make sure he or she had the financial knowledge and skills to manage their money while away at school.

1. Budgeting 101

At this stage of your child's life he or she already understand the basics of budgeting from handling an allowance or earnings from a part0time job. But now that your child is at college, you may want to help him or her establish a "real-world" budget, especially if your student is going to live off campus with rent and utility expenses. Here are some way you can help him or her plan and stick to a realistic budget.

• Help your college bound student determine what income he or she will have, where it will come from (earnings, financial aid, or you) and how often it will be coming in.
• Determine together how you and he or she will spilt the financial responsibilities. You may decide that you will pay housing costs and your child will pay for books, school supplies and incidentals.
• Acknowledge that college isn't all about studying. However, explain that splurging this week means scrimping next week. You should include entertainment and encourage your student to stick closely to the budget.
• Show him or her how to track their expenses by saving receipts and balancing their bank accounts. Make sure he or she knows that spending more in one place will mean spending less in another and that reallocation of funds may sometimes be necessary.
• It is very important that your student know they can come to you at the first sign of financial difficulties without the fear of angering you.

2. Opening a Bank Account

If he or she does not already have a bank account, now is the time to open one. Make sure they have a savings and checking account with a debit or ATM card.

• Look for a financial institution that offers account with these features, such as a Parsons Federal Credit Union University Account:
  • A simple fee structure
  • Free Checking with no minimum balance requirements
  • ATM or Debit card to access cash at ATM machines on campus
  • Free online, mobile and telephone banking
  • Overdraft protection
• Make sure he or she is aware of the consequences of overdrawing their account and what the fees are from both their own financial institution and the merchant. Also explain what ChexSystems is and how a record of account abuse or bouncing checks can haunt them for years.

3. Getting Credit

For most parents this is one of the most frightening aspects of children growing up and the most exciting for the child! New federal laws prohibit most credit card issuers from issuing credit cards to people without the means to repay the debt and require a co-signer for more young people below the age of 21. However it is never too soon for your college student to establish a solid credit history so you may want to consider being a co-signer and closely monitoring your child's credit habits and step in if necessary.

• Explain that a credit card is not free or supplemental income and what is spent must be paid back with interest
• Start our with a low credit limit, no annual fee and a grace period before interest is applied to new purchases
• Encourage him or her to review their monthly statements for accuracy and to pay the bill in full each month to avoid late payment fees and increase rate increases
• Make sure your student knows that by only making minimum payments each month he or she could complete their post-doctorate program before they pay off their credit card balance
• It is important that he or she understands that late payments and overlimit fees add up quickly and will also damage their credit and could make it difficult to by a car or house, or even get a job