Going back to college campuses looks a little different this year. Many college students are experiencing a shift to all online classes already, and I’m sure more schools will follow suit in the coming weeks. Even though the back-to-campus flow has shifted, the importance of building healthy financial habits early on remains the same. College years are very critical for creating healthy spending and saving habits that set younger people up for long-term financial success. Below are a few things to consider as you send your kids off to school.
Emphasize the importance of creating a budget
Even though many college students may not have any income of their own, it is important that they are mindful of what money they do spend – even if it’s just the points on their meal plans.
I can’t tell you how many times my friends in college (and myself, once or twice) would get in a pinch at the end of the semester because they were running low on meal plan dollars. They would spend way too much on the front end, leaving them with very little to get by as finals approached. Having a Starbucks right on the walk to class that you didn’t have to spend “real” dollars at might have had something to do with it. It’s easy to view meal plan points or dollars as something other than real money, making it easier to blow through them more quickly than you intended.
Try to avoid this mistake by encouraging your students to take the total amount of their meal plan and divide it by the number of weeks they will be on campus. This will show them how much they can realistically spend per week on campus meals, and, hopefully, create mindfulness when they swipe that meal card.
Maybe they don’t have a meal plan, but you are supporting your college students by helping them pay their living expenses. Setting a fixed weekly allowance can be another way for them to practice creating and sticking to a budget.
Encourage your college student to check into Work-Study options
Many college students seek part-time jobs to pay their living expenses, or just to have a little extra spending money. One of the best options to look into first when seeking part-time employment is seeing if you qualify for Work-Study – a federal program that provides college students with a set award amount that they earn through part-time employment throughout the academic year
Many Work-Study positions available on college campuses have flexible hours and are a good way to network. Student support offices within specific majors or programs will have student worker positions available. These offices will work with students to make sure hours are reasonable and fit in with class schedules. Another perk: On days when there isn’t much to do, many supervisors allow students to study and work on assignments, so long as it isn’t taking away from other job responsibilities.
Start building credit
Being intentional about building credit early on can benefit college students greatly in the long run. One way to build credit is applying for a credit card tailored to students. Most major banks and credit unions have credit cards with low credit limits and no annual fees specifically for college students. Have your student apply for one of these and put only a few small purchases per month on it. Limiting the transactions to one or two types of expenses per month can be a savvy approach. For example, only use the credit card for gas, or for the Netflix subscription, and pay it off every single month. This can put your students on the right trajectory for all the financial decisions life after college entails.
~ Hannah Bartlett
Any opinions are those of Hannah Bartlett and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notices.