Fall classes at universities and colleges will begin in the next couple of months. You might have a child, grandchild, niece or nephew who is ready to spend their semester studying, socializing, and living on their own. You’ve prepared them for college life by teaching them how to grocery shop, prepare simple meals, and do laundry. Often, however, college students head to school with little knowledge about making and managing a budget. So take a few minutes and sit down with your college student today and share these tips. Your advice could help them not only during their college days but throughout their lives.
- Help your college student set up necessary accounts. College students likely will need at least checking and savings accounts. Start teaching them good habits now and ask them to research convenient banking institutions close to campus or their residence.
- Establish clear financial responsibilities. Determine who will be responsible for which expenses. If you are planning to take care of bills such as health or auto insurance, or cell service, be clear with your student that he or she is responsible for living expenses including rent, utilities, groceries, and other household costs. If they had previous issues with their driving license, you may help them with their sr22 insurance application and payments.
- Wean them off your bank accounts. It might be tempting to continue paying their expenses to help them get a strong start, but that does not teach them to be self-sufficient.
- Is a credit card appropriate? Credit cards often give college students the most trouble. They are an effective way to establish early credit history, but it is common for students to run up balances without fully understanding how credit cards work. If your student gets a credit card, be sure they understand how important it is to pay off the balance every month. With the number of starter credit cards for no credit history available today, students will be able to get their own credit card for emergencies, though.
- Will the student work during college? Holding down a part-time job while going to school has plenty of advantages. It helps cover living expenses or provides money to save each month. It also makes it easier for them to manage money and gain valuable work experience. And finally, it looks great on their resume after they graduate and go looking for a job in their field.
Whether you’re a new parent with time to prepare or have a high school student with college just around the corner, a sound financial plan can address concerns and offer options you may not be aware of. The best way to help ensure you will be able to afford the ever-increasing cost of college expenses is to start saving today. It may be beneficial for you to speak with a financial planner to help you understand your options for savings and investments and how starting early can help build your college nest egg. Some items to discuss with a financial planner include:
- How much it may cost to send your child to college;
- Investment options to help meet your college funding goals; and
- How to minimize taxes on your potential investment earnings.
It is never too late to sit down with your college-bound child and talk frankly with them about the importance of financial planning. It is also important to remember that your child can take out a loan or maybe even receive a scholarship to attend college, but there is no such thing as a retirement loan. You might need to make some compromises to meet both goals of education and retirement. The earlier you plan, the more realistic these goals will be.
Kathryn Palao, Certified Financial Planner®
Vice President & Investment Advisor Representative at Hudson Financial Services, Inc.
Tel: (914) 762-4760, Email: kpalao@hudsonfs.com, Web: www.hudsonfs.com Investment Advisor Representative of and securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a Broker/Dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity.
Hudson Financial Services, Inc. 1249 Pleasantville Road, Briarcliff Manor, NY 10510.
