Did you know that the average college student graduates with $4100 in credit card debt? This does NOT include tuition and books. Now is an excellent time to teach money management tips to your high school student to ensure responsible spending when they leave the nest and enter college.
My 1st tip is to open a checking/savings account for your kid. This will allow them to begin to learn the basics of money management. A lot of institutions offer a service that tells you via email or text if the account falls below a specific balance. Set the threshold high enough that you don’t get caught with overdraft fees. You want to teach your kid how to manage money – however, you don’t want it to cost YOU cash! If your kid falls below the threshold – charge him an overdraft fee.
Next, I would fixed him up with a debit cards. It’s often difficult to manage money when you are able to withdraw funds anytime you desire.
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Plus, the balance shown at the CREDIT is not always up-to-date. It is important for the student to understand that checks composed do not post immediately. Also, ATMs can charge withdrawal fees. Plus, the majority of gas stations will allow overdrafts if you pay out at the pump, but will not take a debit card inside if there are insufficient funds. All of these situations can cause the inexperienced money supervisor to overdraft their account. Once again, chose an institution that tells you when the balance is low – so you can teach the life session without paying for it!
Another strategy that may be implemented while your student is still in high school is to create a budget. How much do they earn with their part-time job? How much do they anticipate receiving for vacation and/or graduation gifts? What are their own expenses? Once you create the budget, let it be known to her and revisit this budget each month and revise as needed. This revising process will allow you to help your kid start to plan for big expenses (college books) and decide how much to put aside each week in savings.
Utilizing these tips will assist your student in becoming a better money manager and hopefully keep them from adding to the growing college student debt. It is important to remember this is a process. Budgeting is a learned ability. There will be bumps along the way – but the experience will pay off in the end.