college

5 Financial Lessons for College Students

Follow these tips so your kids will score well when it comes to managing money while away at school.

Forget tuition. Once that bill is taken care of, the biggest financial challenge you face when sending kids off to college is making sure they don’t overdraw their checking account or run up a credit-card bill they can’t pay off. Here’s how to help boost their financial GPA (and save big bucks on fees).

Open a low-cost checking account in your child’s college town, especially if his current bank doesn’t have branches there. Pay close attention to the bank pitches you’ve been getting in the mail so that you can spot the best combination of low balance requirements and low (or no) fees. With a host of new regulations squeezing bank revenues, totally free checking will be harder to come by and may come with strings attached, such as a minimum number of required debit-card transactions. For help in searching for an account, go to www.checkingfinder.com.

Extra credit: Choose a bank with a network of ATMs that’s convenient to your child’s dorm or favorite hangouts. College kids are notorious for running up ATM fees by going to the closest machine, even if it’s not in their bank’s network.

Set up an overdraft strategy. Students are also prime candidates for racking up charges by overdrawing their accounts with small purchases at the drugstore or coffee shop. As a result, they’re particularly affected by new rules that prohibit banks from automatically enrolling customers in pricey overdraft-protection programs. Now you have to actively select such a program or choose a less-expensive option, such as linking your child’s checking account to a savings account -- or letting him suffer the embarrassment of having his purchase declined (see Closing the Door on Overdrafts).

Extra credit: Have your child sign up to get balance alerts via e-mail or text when his balance is low.

Downplay credit cards. New rules require that young people under 21 have a co-signer when they apply for a credit card. Don’t be too quick to sign, or even to make your child an authorized user on your card (see Debit vs. Credit Cards for Kids. Your student should first be responsible enough to manage a checking account. If he doesn’t overdraw his account, he may be mature enough to handle a credit card. But don’t rush it.

Extra credit: Regardless of whether your child uses a debit or credit card, he shouldn’t get in the habit of picking up the check for group pizza or beer and expecting to collect from everyone else. That’s another big money pit for college students; even with the best of intentions, their buddies will never pay up.

Guard personal information. This is the Facebook generation, who will tell the world “everything but their underwear size,” as a friend of mine puts it. Better they should reveal the size of their skivvies than disclose their PIN or credit-card number, even to a friend (see How to Fix Your Facebook Settings).

Extra credit: Remind your kids that when they’re shopping online, they should look for secure transaction symbols, such as a lock in the lower right corner of the browser window and a Web address that begins with “https.” See 5 Tips for Safe Online Shopping for more advice.

Keep track of expenses at least for the first semester. Student services should be able to estimate how much the average student will shell out for entertainment, travel, food outside the dorm and other miscellaneous expenses. But your kid may not be average. He can monitor his own transactions via online banking. PNC offers a Virtual Wallet budgeting site for students (www.pnc.com). Or you can just buy your kid some bright green Post-its on which to jot down what he spends. Even if he doesn’t tally them, they provide a visual cue that his spending is mounting up.

Extra credit: Before your child leaves home, make it clear which expenses you’ll cover and which are his responsibility. Hint: He gets to pay $300 for a football season ticket.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022

Recommended

Biden Extends Suspension of Student Loan Payments
loans

Biden Extends Suspension of Student Loan Payments

The president gave borrowers another 90 days until May 1 before they have to start paying back their student loans.
December 22, 2021
Honey, We Need to Talk About Money
Women & Money

Honey, We Need to Talk About Money

Instead of focusing on the numbers, couples might have more success discussing their goals.
November 24, 2021
How to Choose the Right Payment App
banking

How to Choose the Right Payment App

Using PayPal, Venmo, Zelle and other apps is convenient, but there are pros and cons to each.
November 23, 2021
Shop for a New Wireless Plan and Save Big
Smart Buying

Shop for a New Wireless Plan and Save Big

Competition is fierce, and carriers are dangling free phones and streaming subscriptions.
November 23, 2021