BY DODI KINGSFIELD, TECHNICAL SERVICES SUPERVISOR, FREELANCE WRITER & AUTHOR, FORESTVILLE
It’s almost the end of the school year. By now, any financial troubles your student didn’t have in the beginning of the year may have caught up with them and reared their ugly head now. Their financial woes are a gentle reminder that the impulsive, disorganized teen you sent to college in the fall is now an impulsive, disorganized consumer running amuck with a checkbook. To make matters worse, they may attend school out of state which makes assisting them in their money disaster a bigger challenge than running the Boston Marathon.
As a mother of two young adults attending college, one in state and one out of state, just when you thought life at home might be a little easier, I am experiencing firsthand the money challenges my college kids create for me. While not intentional, they are learning on the fly, and as a result, so am I. I thought we had addressed everything before they went off into the world on their own. They were prepared for new experiences, new people and new challenges, but not all of the new responsibilities. As I look back, maybe it was too much like sending a kid out into the world with a bag full of candy, expecting them to still eat their fruits and vegetables regularly.
What could be done differently to avoid any further financial troubles in the future? There are a number of financial lessons I would teach earlier in life and there are a few bits of knowledge I wish I had known earlier. My college kids had to learn via the school of hard knocks, and are still learning, but my younger kids will definitely benefit from their siblings experiences and their parents’ new found financial knowledge for students.
I would like to share some of the ways our family has learned to lessen or avoid financial troubles when sending teens off to college in order to help other parents avoid some of these money experiences with their kids.
Start a small checking account in your student’s name (and yours) before they head off to college. While they teach some checking and accounting practices in school, there’s nothing like hands-on experience. By getting an account early, a parent has the opportunity to go over their statements with them, discuss hidden charges (like ATM fees, service fees and bounced check charges) and teach them how to balance a checkbook. By adding the parents name to the account, you have access to their account and information while they are attending college in Wisconsin having trouble with their account back home. If you aren’t on the account, your hands are tied on the amount of assistance you can provide.
Savings accounts are a great way for very young kids to learn the value of a dollar. Have them save at least ½ of what they get (birthday money, holiday gifts, etc.) and before they know it, they’ll have a nice little chunk of change sitting in the bank that’s all theirs. Kids love money and they really like it when it seems to grow before their eyes. Even if they save just a dollar a week, it teaches them the value of saving and planning for the future.
Plastic is evil for young students. Avoid credit, debit and ATM cards. They are only for the highly disciplined and if necessary, make sure your student understands how to keep track of these uses in their check book. Somehow they think the ledger is only for writing down checks, and not all that other stuff.
When choosing a banking institution for your student, make it clear that the Bank of Mom and Dad or Grandma and Grandpa’s Financial Farm are not a viable option. Having an account in their home town and an account at school is helpful, especially for the quick transfer of funds. You and your student should use the same bank at home for the best customer service. When at school, choose a credit union (many universities have their own) so your student can benefit from the other perks offered like group insurance and low interest rates (for their future car loan).
Start working early and encourage self-employment like lawn mowing, a lemonade stand or snow-shoveling when your student is young. They learn the value of a dollar and become self-motivated at finding employment for themselves.
When your student begins receiving a paycheck, discuss taxes and their requirement to file them annually. Teach them the important parts of a pay stub and how to verify whether they have enough taxes being taken out of their check. They need to know how to get it corrected so they can avoid paying the government in April.
Once your student has a cell phone or their own phone number, the telemarketing begins, just like at home. Have you ever thought about your sweet, gullible teenage daughter talking to a telemarketer while you aren’t there to intervene? The next thing you know they have a monthly bill for $59.95 over the next three months and they can’t remember how it happened?
That’s what happens, so it’s very important to discuss telemarketers with your kids and how to avoid getting the scam. Teach them the right to say no, how to decline and hang up and that they aren’t obligated to listen to the speech. Never give out your credit card information or your banking information. And don’t forget to mention that junk mail and pop-ups and e-mails on the computer are different versions of telemarketers. Just say no.
If you don’t want to break the bank with cell phone charges, make sure you choose the right plan for your student. For those who can’t keep track of their hours (or other things) or love to talk and text, get a plan with unlimited minutes. The plan may seem expensive in the beginning, but it beats racking up bills at $0.45/minute which make the unlimited minutes plan seem like a great option. Another choice is a pre-paid minute plan. Your student (or you, depending on the arrangement) decides on a budgeted amount for the phone which becomes the amount available. If the time/dollar amount gets used up before the month is over, the student has to wait until the next month when the money is available. This kind of plan teaches the student to keep track, pay attention to their phone use, and tends to limit phone use to emergencies and things that really are important.
Options cost money, and they aren’t necessary. With internet use on a computer, it’s not a requirement for a cell phone. Texting may be a preferred method of communication for today’s student, but there are other ways to talk to people. For some colleges and universities, texting is an expeditious way to communicate safety issues to the student body, so consider a limited plan for those reasons. Camera options are another nice feature, but when the student needs to pay for the option, it suddenly becomes not so critical.
Whether you are a student or an adult, living according to a monthly budget has loads of challenges. Opportunities present themselves when kids are young to begin learning how to budget: lunch money, allowances, birthday money. These things are simple and don’t normally affect a student’s life too seriously.
Yet when they head off to college, and need to juggle tuition, room and board, as well as entertainment costs, some kids have no idea that you can’t spend more than you have coming in. And they need to learn how to budget. They need to know how to make the proper decisions, how to prioritize, and how to plan.
One of the easiest ways to begin teaching these life skills to your student (before they head out the door to another town or state) is to have them help with the household grocery shopping. Get them involved in creating a shopping list, finding coupons, calculating costs, planning until the next paycheck and determining how they can spread out the costs. Make sure they consider other bills when determining a grocery budget so they know they have to think of all of their costs, and not just the food budget.
Reviewing bills and having your student help balance the checkbook (if not confidential information) are other ways to expose them to budgeting methods. Having them pay for their own toiletries, brand name clothes, pharmacy items and car insurance are other ways to teach your student about spending their money wisely and reduce impulsive, brand name shopping.
Dodi Kingsfield, Technical Services Supervisor, Freelance Writer and Author. Dodi is employed as a Technical Supervisor for a large food manufacturer in Dunkirk, writes childrens and young adult books and does freelance writing for the web and magazines. Married for more than 20 years and a full-time mother of five, Dodi enjoys yoga, organic gardening and telling tall tales. She can be reached through her e-mail address at email@example.com.