Back to School Financial "Do's" for College Freshman*
Every year thousands of students are sent off for their freshman year of college by parents who have carefully shopped, planned, and packed the essentials for a happy, healthy year on campus. But do our teens really have the tools they'll need to stay financially fit while they are at school? What can parents do to help their students feel confident enough to manage their finances without late night calls asking to send money?
According to a 2008 high school study by the Jump$tart Coalition, 52 percent of seniors surveyed did not understand that a credit card holder who only pays the minimum amount on monthly card balances will pay more in annual finance charges that a card holder who pays their balance in full. Experts say that the average college freshman has more than $1,500 in credit card debt, which will more than double upon graduation.
So before you pack up the mini van with dorm essentials, start a conversation with your teen to make sure you both have a plan.
The following is an excerpt from: "40 Money Management Tips Every College Student Should Know," published by the National Endowment for Financial Education, Nefe.
Know the Ground Rules
Have an open conversation with your student about your expectations. Do you want them to get a job? Do you want them to focus full-time on their studies? Will you help out if they get into a financial jam. Discuss the "terms" and outline which financial responsibilities are yours and which are your students. Then help them make a plan, and hold up their end.
Just like a class notebooks, create a system for your child to keep track of important financial paperwork and other documents. Important documents can be college records, financial aid, loan records, receipts and warranties. A good system helps students pay bills on time, track potential mistakes, and remember important events like loan approvals.
Distinguish Between Needs vs. Wants
For example, food is a need-a latte is a want. A cell phone for safety is a need but a custom ringtone is a want. Small purchases like music downloads add up over time. Encourage spending on items with lasting value. It will help them save money and meet their budget.
Take Advantage of Student Discounts
When students do elect to spend, it might cost less if they show their student ID card. Whether you are going to the movies, buying a pizza, or considering a flight home for the holidays, ask about student discounts. Protect Your Personal Information
Don't give anyone the opportunity to spend your student's money. Encourage them to safeguard their personal and financial information. Secure Social Security card sand bank account numbers. Teach students to delete emails requesting personal information. And always review credit card statements and phone bills for unauthorized use. Contact the company immediately if you suspect fraud.
Build Good Credit
Don't bounce checks. Pay your rent, loan payments, and bills on time. Late payments lead to penalty payments and poor credit scores. Poor credit scores make future loans more expensive or unavailable. Avoid credit card "pushers" on campus and once a year order a copy of your credit report and monitor it for fraud or mistakes.
Understand Your Financial Aid
Your financial aid is important. Do what you have to and keep the money coming! Read all your documents carefully. Do you need to reapply or renew each year? Is there a required grade point average you must maintain? Does your work-study job preclude you from working anywhere else? Understand all your obligations. And never, never fall victim of scholarship scams. You never pay a for scholarship money. Legitimate scholarships never charge fees and the application information is available to all.
Get into the savings habit
There are only two sources of money: people at work and money at work. Save every month, even if it's a small amount. When you save and invest you put your money to work for you.
Resist Peer Pressure
No matter what you have or how much you have, someone always has more stuff or better stuff. Surround yourself with good friends and strong values. Your net worth is not the same as self-worth. Remembering that will help you avoid debit and can save you cash over time.
If you don't know how much money you owe, are using credit cards to pay normal bills, or are making minimum payments on credit cards, get help! Often you can talk to the dorm's resident advisor, a financial aid officer, or your parents or guardians. As an adult you'll want to face your situation before it gets out of control and create a manageable plan to get yourself back on track!
- National Endowment for Financial Education, Nefe: www.nefe.org
- Junior Achievement of Northern California: www.janorcal.org
- The Jump$tart Coalition www.jumpstart.org
About Linda McCracken
As President and CEO, Linda McCracken is responsible for leading Junior Achievement's operations, planning, development, expansion, programs, and financial management in 19 Northern California counties. Under McCracken's guidance, Junior Achievement delivered financial literacy programs to over 101,591 students in 4,040 classrooms in the 2006-2007 school year. In 2007, JANorCal was awarded both the Summit Award and Peak Performance Awards from Junior Achievement Worldwide, which highlighted the organization as among the top 10 percent of offices nationwide.
In 2007, JANorCal was selected from other California JA offices to manage operations in the Central Valley-a high need area that had yet to benefit from JA programming. Under Ms. McCracken's leadership JANorCal expects to impact an additional 5,561 students across the new territory.
In addition to program service expansion, Ms. McCracken and JANorCal have been recognized for numerous achievements including:
JA Peak Performance Award (2007)
JA Summit Award (2006, 2007)
West Contra Costa School District, State of Our Schools Award: Partner of the Year (2007)
Opportunity Knocks: People's Choice Best Nonprofit to Work for Award (2007)
JA Collaboration Award (2006)
Prior to her role as CEO, McCracken served as Vice President of Operations and drove substantial increases in students served, funding, sponsorship contributions, and superior program delivery.
Beyond her work at JANorCal, McCracken serves on the Junior Achievement U.S. Presidents' Roundtable. She and her daughters also volunteer for the National Charity League.
Ms. McCracken has a BS in Communications with a minor in Marketing from Texas A&M University. She also completed graduate courses in Business Administration at Texas Tech. She lives with her husband and 3 children in Danville, CA.