How to talk money with your college student
While college students earn their degrees, paving the way for future success in their chosen fields, they should also be paving the way for a healthy financial future.
Unfortunately, money is not always discussed at an early age. Indeed, 36 percent of Americans say they are uncomfortable talking about money, and 18 percent say money is a taboo subject within their family, according to the American Psychological Association. As a result, many students start college without good money management skills. What’s more, the rising cost of tuition, housing and other fees makes it even more challenging to graduate in good financial standing.
Consider initiating a productive conversation about responsible money management. Here are a few things to consider and discuss.
- Creating a budget: Break down expenses to show where money is spent and how it’s wasted. Introduce the concept of the 50/20/30 rule of thumb, which encourages budgeters to apply half their monthly budget into fixed costs (i.e. rent, cell phone plan), 20 percent into financial goals (i.e. car, vacation), and 30 percent into flexible spending (i.e. food, shopping, entertainment, day-to-day expenses).
- Building credit: Credit can influence or limit future financial opportunities, even potentially harming job prospects. Talk about the importance of establishing and maintaining good credit.
- Funding college: Whether it’s a work-study program, an off-campus job or applying for and receiving a merit-based scholarship, there are many ways students can contribute to their college education financially and ease potential loan debt. Encourage students to investigate these opportunities.
- Free resources: Free resources exist which can help get the conversation going. For example, consider checking out Wells Fargo’s new “Preparing and Paying for College” webinar series. Families can take part in free instructor-led events that offer financial planning resources, information on responsible money management and best practices for paying for college. Webinar topics include preparing for college, applying for scholarships, funding a college education and student loan repayment. Registration is free. To receive information about the Wells Fargo webinar series, visit engage.vevent.com/rt/preparepayforcollege.
College is an exciting time for students, filled with new friends, new knowledge and new experiences. Encourage smart money management during these transformative years and beyond.