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Helping Kids Manage College Costs
Want to scare yourself silly? No need to visit the local cinema; just sit down for 15 minutes with your college-bound kid and talk about finances. Sadly, most soon-to-be freshmen are heading off to their new, independent life without a clue about how to pay for it. Remember, they’ve been living the high life on your salary, not theirs and are probably quite comfortable to continue doing so. Don’t despair, however – listed below are five suggestions to get your student better prepared to make wiser financial choices away from home. Whether you choose to pay for everything or expect your child to bear most of the financial burden of college, help them understand the financial consequences of the choices they will be making at school.
So, amid the excitement of the final few days at home, make sure you carve out time to sit down with your college-bound student and do the following together:
1. Make a list of all the necessities.
2. Make a list of possible optional activities (i.e. the fun stuff)
3. Discuss the use of a credit card
Responsible use of a credit card can be a great way to build a good credit history for your child and keep track of expenses. But most students inevitably get into trouble with the idea of “buy now, pay later”. Have some rules in place around:
4. Discuss the options for part-time work
Despite all these previous discussions, once they get to campus and see all the fun things they want to do, they may decide they need more money. Most campuses have plenty of options for part-time jobs (library, cafeteria, etc) that work around class schedules. Here are some things to think about:
5. Discuss Your Student Loans
If you are paying for college with student loans, make sure your child understands the amount borrowed, the interest rate, and the payment terms & conditions.
Are they paying off the loan after they finish school or are you?
What happens if they take more than four years or want to go to grad school? That may seem like a long way off for college-bound freshmen, but starting the discussion now will provide some clarity when those future decisions need to be made.
Gearing up for college in the dog days of summer is a busy time. Some of these discussions need to happen before school starts and some can happen as you go along. But make sure you don’t just set the rules or give your child the answers; walk them through the possible outcomes and decision points so they end up owning the answers.
And for those of you who have been down this road already, let us know what worked and what didn’t in discussing money with your college-age kids.
This article originally appeared on the NAPFA Personal Finance Blog in conjunction with FiGuide.com. See the original article at http://www.figuide.com/helping-your-kids-manage-the-costs-of-college.html.