Your children's college years offer many opportunities to discuss choices that can have a long-term effect on a student's future financial well-being. Certified financial planner Andy Schlafer, with Robert W. Baird and Company, was on with us to share some ideas on how to have those conversations.
What is one of the key lessons that parents should be teaching their kids at this point in life?
College is a time when kids are often living independently for the first time. Establishing a budget and helping them stick to it are critical, and keeping spending money separate from savings can be a good first step.
Identity theft is a growing issue for all of us, and it's becoming more popular on campuses. What should kids know?
Encourage your child to keep financial information such as their Social Security and account numbers secure. Tell them not to leave account statements or personal information in dorm rooms or in backpacks that can be stolen. Just because kids don't have a lot of money themselves doesn't mean an identity thief can't cause long-lasting financial harm.
College is a point when many young adults are first exposed to debt. What do college students need to know before taking on student loans?
College loans are a fact of life for many students, but just taking out a loan without thinking carefully about it can put many kids in the financial penalty box before they've even really begun their careers. I encourage parents to talk to their kids early about what they are willing to pay for (both for undergraduate and graduate school) and what the student's responsibility will be.
What can be done to control the amount of loans needed?
Discuss the choices students might need to make, such as working during the school year or living at home for a year to help defray costs.
Is it a good idea for a college student to have a credit card?
You may encourage your child to apply for, and get their first credit card during the college years. Credit cards aren't inherently bad, and having a credit card and paying it off monthly can contribute to building a credit record. However, students can undermine their credit with late payments or by piling on debt they cannot pay. One idea is to have copies of the statements sent to the parents so they can monitor the account and shut it down if necessary.
College is a time of learning, and learning to be Financially Fit is one of the greatest lessons you can teach your child.