The secret to success could be unlocked when students learn how to handle their money – especially in the early years of college. Young adults that are in college or just now starting are dealing with some very complex financial decisions. Cathy DeWitt Dunn joined Shannon Murray on Fox 4 News to discuss college financial planning concerns and help ease the burden during this stressful time.
Budgeting and finances are things that parents should be thinking about now before their child goes off to college. It is important to start having conversations with your children at an early age. If we can empower our college students now, imagine what that’s going to look like later down the road for them. Having the conversation with your young students is key, especially for a young person who is just starting out and might not know much about it now.
Budgeting is the cornerstone to college financial planning. Once you have a specific dollar amount that you and your student are comfortable working with, you need to start thinking through how much your student’s living expenses will be (transportation, social activities, etc.) Determining this dollar amount before your student heads off to college will allow for wiggle room and the opportunity to move money around as you both see fit. Allowing your student to have this control of how their money is being spent will assist them with making spending decisions farther down the road. We know that money doesn’t grow on trees – but we need to make our children aware too. In order to get a better handle on expenses, Cathy has a budget worksheet that is specific for college students.
Credit is really important for a college student who has newfound freedom. Fifty percent of all college students now have a credit card. These students with credit cards may think they have an unlimited number of swipes. Managing your credit can end up being a tough lesson to learn sometimes.
Learning to manage your credit card is a crucial aspect of college financial planning. Cathy always encourages her clients and their students to pay off credit cards on a monthly basis in order to build a good credit score. One of the challenges that comes with not paying off your credit card on time is compound interest, which is when things can get out of hand. Having a good credit score is key for students. Once graduating from college, students will need to find a job. Most employers now do a background check, and your credit score will be something that they see. You want to make sure that your student pays off their credit cards in order to maintain a high credit score and not be burdened by it later down the road.
Student loans are something a lot of people are dealing with well after college. So, you have to start thinking about it early on. Cathy encourages all of her clients to read the fine print. A lot of people have taken out federal or private loans, but they’re not really sure what it all says. You need to do your due diligence so you know what your grace period is, when the interest accrues, etc.
College financial planning can be tricky, but it doesn’t have to be. Using free resources such as this budgeting worksheet and other resources can be a great way to prepare your student financially for college.
Ready to work with a financial planning advisor, but not sure who? Consider scheduling a free appointment with financial expert, Cathy DeWitt Dunn.