For many students, college is the first time living on their own, and that means it's often the first time managing their own finances!
From late-night pizza orders to clothes, books and personal supplies (not to mention tuition), college life can get expensive quickly. But any college student who learns these five lessons early could graduate with less debt and still have plenty of fun along the way!
1. Know the Difference Between a Need and Want
College is full of temptations from parties and spontaneous road trips to concert tickets, takeout, a coffee on the way to class, new clothes and more. Encourage your student to pause before every purchase and ask whether it's something they truly need to survive, or just something they want. It can be tough when their friends seem to be spending freely. Small purchases add up fast, and a quick gut-check can save real money.
2. Help Them Create a Simple Budget Before They Start Spending
By the time September arrives, your student should have a good sense of how much money they'll have each month. Help them build a monthly budget that tracks their income (financial aid, a part-time job, family support) and their expenses, everything from coffee and pizza to transportation, books and clothes. Even a basic budgeting app or spreadsheet can help them avoid running out of money halfway through the semester.
3. Understand How Credit Cards Work
A credit card can help students build a strong credit history, which can benefit them down the road. Unfortunately, it's really easy to put expenses on a card and then be surprised that the bill is so high at the end of the month. Students should keep track of what they're using a credit card for, and be sure to charge only what they can afford to pay off each month. Good credit can make it easier to rent an apartment, qualify for lower insurance rates, and secure better loan terms after graduation, so it's important to be responsible now!
4. Keep Track of Your Student Loans
If there is borrowed money for school, students should take time to understand how much is borrowed, the interest rates, and when repayment begins. Some parents want their students to "not worry" about it until after graduation, but that can result in an unpleasant surprise when they should be celebrating their accomplishment. Transparency and knowledge are important here!
5. Start Building Good Money Habits
Help students get into the habit of checking their bank account regularly, setting aside some money for emergencies, avoiding overdraft fees and asking questions before signing financial agreements. The habits they build during college can benefit them for years to come.
A person's late teens and early 20s might be some of the best years of their life, full of fun, exploration, learning and growth. Building good financial habits now can help make the rest of their life easier. This summer, get your student to sit down and take a look at the CommonWealth One website. Their Student Account is a great first step — no monthly fees, easy mobile access, and a real-world way to put these budgeting habits into practice. Pair that with our interactive money management courses and fun videos and they'll have both the tool and the know-how to start their financial journey off right.
Watching your student grow into a confident, financially capable adult is one of the best parts of these next few years. We're honored to be part of that journey. Let us know how we can help your student succeed!
