Helping Your Student Stay Financially Responsible in College

Many students can fall into the trap of overspending and being under budget.

One of the best parts about graduating high school could be raking in hundreds of dollars in congratulations money from family and friends. 

Students will often spend that money on a vacation — a way to reward themselves for all of their hard work. 

But before your graduate books that summer trip, financial expert Dale McCarty urges parents to pull the emergency break and help them focus on saving. 

"I feel more of the kids I grew up with had jobs in the summer and worked more," said McCarty. "It doesn't seem like as many kids have jobs. So, I don't know that they have the basic understanding of money."

"When it comes to graduation, congrats to all the graduates, but we're heading into adulthood. It's kind of our first sign of independence so it's time to start doing I think adult things with our money," explained McCarty.

McCarty said students should save about 75 percent of their graduation money and put it into a savings account. Those funds should be seen as rainy day money, something he said many adults don't even have. 

Next, McCarty said parents should help start their kids with off with checking account. The money in the checking account can be used for day to day expenses like food, toiletries, a new book for class and even a fun time with friends.

"Then the parents can say okay, so you've got this money to last you the first semester or maybe the first year," McCarty said. "If you run out, you're kind of on your own."

McCarty strongly suggests signing your soon-to-be college student up for a credit card.

"I think it's very important because eventually they're going to have one. And credit card to many people feels like free money," he said. "Getting in trouble at $200-$300 when your parent sets a low limit for you, versus maybe you get $3,000 in college without the parents knowing, it's a lot different debt. So, if they can learn that early, I think those are some important lessons."

He said parents should guide their student through the consequences of abusing a credit card, like penalties, interest and the worst: credit card debt. 

"By helping guide them and teach them, I think you can help them learn less expensively," he explained. 

"And set up an investment account. I mean, what a huge advantage it would be to possibly come out of college with a net worth as opposed to a bunch of debt," McCarty said.

With all of these tips, adult supervision is essential. Monitoring each account should be a part of every parents weekly duty to make sure their students are on the right path.

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