It’s summer and families are planning to send their college students to dorms or apartments across the country. While you’re helping your student decide what they’ll take with them and talking about fall course selections, it’s also important to talk about financial education. Here are a few tips from “10 Things College Students Need to Know About Money” to help your college student get started on the right foot this fall.
#1 Read and Understand Student Loans
According to CNBC 70% of college students end up with taking out loans to pay for college. To make matters worse, the average loan amount is $37,172. Before your student takes on more debt than necessary (did you know you can refuse or “return” some of the monies offered by the Financial Aid Department) it’s important to think about what the return on investment of those borrowed dollars will be and create a plan to start paying the money back six months after graduation.
#2 Open an Account at a Credit Union
Now that your student is in college, they will need a checking account to cash checks and pay bills. Banks are an obvious solutions but have you considered a credit union? Credit unions perform the same function, and offer the same products, as banks but tend to have lower interest rates for loans (credit cards, car loans, mortgages, etc.) and often have better customer service. Though individual credit unions are small, they work together to form large and powerful networks so customers have free access to ATMs across the country and can sometimes rely on other credit unions to function as branches for customers that may not have a credit union branch close to them. Click here to find a local credit union.
#3 Create an Emergency Fund
Since your student will be living away from home, it’s important for them to have a financial cushion in case something goes wrong. Helping your student grow a small sum in a savings account or money market account can help them plan better and feel secure knowing they don’t have to rely on mom and dad for small emergencies.
#4 Invest for Retirement
Even though your student hasn’t begun a career yet, it’s important to get into the habit of investing. Starting to invest now takes advantage of compound interest and sets the foundation for a future of financial security.
Regardless of if your student is a freshman or a senior, helping them create responsible saving and spending habits is a good idea.
Shay Olivarria is the most dynamic financial education speaker working today. Previous clients include: Gateway Technical & Community College, SCE Credit Union, American Airlines Credit Union, and San Diego City Community College, among others. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, NBC Latino and The Credit Union Times.The 2nd edition of “10 Things College Students Need to Know About Money” is available now.