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How to talk money with your college student

Blog Post
2 min read
mom and daughter sitting at a table looking at paperwork

If you have a college student heading to campus this fall, make sure you have the money talk before they hit the road. Many students don't understand how today's money moves can mean headaches years later. Add these three conversation topics to your list of back-to-school activities.

Smart Budgeting

The first rule of smart money management begins with budgeting. Having a clear picture of income and expenses makes it easier to see when you’re living beyond your means. In the excitement of being on their own, college students often disconnect spending from a limited income and pay little attention to how quickly several morning lattes or an unplanned night out with friends can add up. 

Create a budget with your student. Factor in the cash they plan to earn from a part-time job and any money you might provide that financial aid doesn’t cover. You both need to confirm income sources and necessary expenses to determine whether the budget needs to be adjusted. 

Debit and Credit Card Usage

Swipe it, insert it, or tap it--whichever way you choose, debit cards are one of the easiest and most popular payment methods out there. While they may seem simple to use, it's important for young consumers, like your college student, to understand the responsibilities that come with this form of payment. These include: monitoring their account, keeping track of their purchases, and maintaining a positive balance in their checking account. 

Once your young adult has earned an A+ at managing their own checking account, you may feel comfortable introducing them to a small balance credit card. You might consider adding them as an authorized user on your SAFE Visa® Credit Card, where they'll get all the same benefits as many of the big credit card issuers without the added fees and expense. This arrangement allows you to monitor how well they stick to their budget by viewing card transactions. Plus, your student can benefit from your good credit example. Be sure to establish solid ground rules for credit card usage.

Student Loan Debt

It’s easy to forget student loans must be repaid - with interest. Regardless of how many forms a student signs, the reality of a student loan payment doesn’t hit them until six months after graduation. By then, they may have racked up $30,000 or more in student loans. 

While your young adult may need your financial information to complete the Free Application for Federal Student Aid (FAFSA), they do not need good credit or your approval to accept certain Federal Student Loans. So, encourage them to:

•    Always seek other ways to pay for expenses before borrowing money, such as grants, scholarships, or a part-time job
•    Keep borrowing to a minimum by using the funds to cover necessary expenses like tuition, books, and housing
•    Consider how student loan debt might affect their ability to buy a new car or travel the globe after college 

Young adults can avoid the financial twists and turns that often lead to bad credit and high debt after graduation. Like other crucial aspects of raising children, it’s best to review these topics early and often. Regular conversations with your student could reinforce money lessons that last a lifetime.