Money Matters
What Taking out a Loan Means
If your child will be contributing to that college education through loans, be sure you both sit down and explain exactly what that entails. “Most likely your child has never paid a bill in her life before leaving for college, and then she’s taking on massive loans for school and doesn’t understand what that means, or what paying it off will look like,” says Mackey. Before your college kid signs on the dotted line for any kind of loan, make sure he understands the concept of interest rates, payment schedules and how long it’ll take him to pay back those loans. “This is the biggest regret many students have,” says Mackey. “And no one really explains what they were getting into from the start.”
The Danger of Credit Cards
Despite what some experts might say, Godfrey does not suggest giving your kid a credit card before sending her off to school. “Credit cards become a magic piece of plastic with no accountability,” she says. If you’ve taught your kids how to budget and live within their means, they shouldn’t need one. In a last-minute pinch, provide some extra money on a debit card for emergencies, suggests Godfrey.
Not Being an ATM for Friends
College living inevitably lends itself to one particularly dreaded situation: borrowing or lending money. “Kids need to be able to say ‘no’ to friends who want to borrow money,” says Godfrey. “That can really add up, and it can be uncomfortable to ask for the money back. Of course everyone gets in a pinch every now and then, and that’s OK—it’s the habitual borrowing from a friend that they want to avoid.”
You're There to Help
Speaking of borrowing money, here's another related topic to cover. While you obviously want your child to not only be responsible for what he’s spending on in school and to budget wisely, it’s important that your kid understands he can come to you in the case of an emergency. Additionally, remind him that it’s not appropriate to hit up friends.
Ways to Cut Spending
Despite the best intentions (and the best budgets), every now and then it’s easy to get off track. When this happens, it’s important that your kid knows how to cut spending. “Chat with your teen ahead of time about some easy ways to cut spending—like buying used textbooks instead of new—and let her come up with some ideas on her own,” says Godfrey. It’s much easier to fall back on some previously determined ideas when money’s tight, rather than trying to pull cost-saving ideas from out of thin air.
Protecting Important Numbers
With everything else that will be going on in your child’s life, the last thing he’ll need is to lose his wallet with all of his important information and cards in it. “Make sure your kid knows his ATM and debit card PIN numbers by heart, so he doesn't have to keep them in his wallet,” suggests Godfrey. You might also suggest that your kid only travel with one form of ID and one debit or credit card, if he has them. This way, if he does lose his wallet or it’s stolen, he’ll have other backup methods of payment.
