Teaching Your College Child About Credit

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By Kirby Cranson

It is true that college opens up a world of new places and experiences — great restaurants, concert venues, new places to shop and people to shop for — as college towns are always buzzing with life. However, it is also true that your eighteen-year-old may not be adept at managing his finances in a way that keeps him doing what he loves to do.

Debt Warning

Managing money can be a tricky business, and if your child is not aware of their spendings, debt could crop up in horrendous numbers. Between you and your child, you must strategize and talk about what will work best for your family.

An allowance is an easy way to watch your money, and cash can only be spent if it is at hand. But more likely than not, doling out cash every time is not easily manageable, especially if your child is far away from home. It is always a great idea to look at what the school provides — if your child lives on campus, perhaps investing in a meal plan for the dining hall is a better strategy than having unpredictable grocery fees.

Is it necessary for your child to have a car on campus? If not, then invest money in a bike or bus fare instead of paying for gas. Simple budgeting skills are also key here – tell your child to think about what they will be spending their money on and plan ahead for the month. If they plan efficiently, then that $10 meal during a spontaneous outing with friends at the end of the month won’t scrape the bottom of your child’s funds.

Credit Cards

For the big money and for personal purchases, it is more likely than not that your child will want some type of credit card. And while it is the easiest way for them to keep their money and have it at hand whenever they need it, having a credit card is also the easiest way to fall into debt.

You must make smart steps at the beginning of the college process to insure your money’s safety. Before your child goes off to school, visit your local bank and learn about credit and debit card options; more likely than not, the bank will have a special student deal.

Look for a debit card deal before a credit card because your child will only be spending money he or she puts on the debit card. Some banks even give the parent monitoring abilities to view your child’s debit card history; more than one eye on that fluctuation of cash can help the type of student who isn’t so keen on keeping track of receipts.

If you opt for a credit card, perhaps designate the purpose of the card. Spending money you don’t have yet is a dangerous route to debt, so if your child knows they can only purchase textbooks, gas, and groceries on their credit card, both of you have a better idea of what is being charged to the card.

Debt Dangers

Debt is a dangerous and very real threat to the happiness of your college student, but if you both work on making smart financial decisions, your child can be very happy with their freedom to spend money. Take a day in the summer before their freshman year to go over all of their options, plan efficiently and you should not have to fret when your child leaves for college.

Author Information

Kirby Cranson has an interest in educating children about money before they go to college. Teach your child about credit and credit cards before they leave the nest.

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Categories: Personal Advice