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The ABCs of Money Management
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If you were asked how best to prepare a child for college, you might say that a well-rounded high school curriculum would be a good start. True, your child does need to be a good student in order to get a foot in the door of higher education. However, for most children, college is their first foray into the world of independent adulthood. And, attached to that newfound independence is financial responsibility.
One extracurricular activity every student should study prior to embarking on his or her collegiate journey is personal money management. Typically, a student's day-to-day spending is done on an ad-lib basis, meaning that overspending is more often the norm rather than the exception. That's why it's important for parents to lay down some financial ground rules and help their children gain an understanding of basic money matters.
There are some simple steps you can take prior to your child's departure to college. These ABCs of financial education can help your child better prepare for personal budgeting success:
a. Start with a "sit down" to discuss expectations, both yours and his or hers.
b. Provide a lump sum each semester, making it clear how long the money will have to last.
c. Explain when checks will come, their amounts, and any rules about their use.
Whether your student will solely depend on you for financial assistance, use his or her own money earned from part-time or summer work, or combine funds, he or she may have a bank account that you've probably been overseeing prior to college. Therefore, it is important for your student to know how various bank accounts work. For instance, you should be sure they know how to accurately balance a checkbook, etc. Sometimes, it can be a good idea for you and your child to visit with a bank representative before your child leaves for school. That way, your child will have the opportunity to ask questions and lay the groundwork for gaining personal financial "sense."
Once School Begins . . .
Trying to get money to college students in different locations can be frustrating, and it is often impossible for anyone to cash personal checks away from home. Fortunately, the advent of the ATM machine has drastically altered the financial landscape for students. Now, a deposit into your child's account is available at the push of the button. However, discipline must be emphasized so that your student does not "dry up the well" by withdrawing funds too quickly or carelessly.
In addition, some parents find that a credit card can provide a good backup for college students. On the other hand, some parents feel a credit card might give a student who is not budget-wise too much of a cushion. Responsibility aside, credit cards can hold some merit with students.
They can be helpful with plane fares and railroad tickets. In fact, many parents who provide their college-age children with credit cards do so strictly for use in emergencies.
They're on Their Own
Ideally, your college student should be able to take full charge of a semester's spending. If you feel the first semester seems too soon, put it off until the next term. Life becomes much easier for parents whose college-age child manages his or her own finances, and the student's education in life skills will benefit, as well.
Deborah A. Cary of MassMutual Life Insurance Company and Affiliates Springfield, MA 01111-0001 Registered Representative of and securities products and investment advisory services offered through MML Investor services.
(059598-000 07/04 - PRA02)
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