As a parent, you are faced with one of life’s greatest challenges: preparing your child for financial responsibility. When your child leaves home for college, they will explore their independence in more ways than one. Learning the financial facts of life can be confusing and can take years. You can help prepare your child for financial independence by sharing these important lessons.

1. Create a budget
The first step to financial responsibly is by making sure you do not spend more than you have. You can empower your child by helping him/her establish a budget for college. Consider how much income the student has (including loans, scholarships and financial aid), then add up the items you are budgeting for to see if the student can afford them. Here are some things to consider budgeting for:

• Tuition
• Food
• School supplies
• Laundry
• Phone
• Entertainment
• Transportation (cabs/bus)

Managing and sticking to a budget will teach your child to make good financial decisions and will provide them with a sense of control.

2. Keep track

Creating a budget is half the battle – sticking to it can be the hardest part. A good tip to share with your child for sticking to their budget is to keep track of all spending. There are a variety of tools available besides bank accounts that can help with money management. Mint.com and LearnVest are two great tools that allow you to organize your finances, set a budget and alert you when you’re getting off track.

3. Be smart about plastic

If your child does not already have his/her own bank account, this will be the first step. Once they establish their own checking account, they are ready to determine how they will pay their bills. There are a variety of different payment options. The most commonly used payment method for college students are debit cards, since there is debt risk associated with credit cards. Take the time to explain the advantages and disadvantages to using both:

Learn more about student banking at studentplatinum.com.

3. Pay bills on time

It is important to explain to your child that not paying bills on time can have a negative impact on their financial future. Explaining the importance of establishing a good credit history early in life is an invaluable lesson.  Your child will need to have good credit history in order to qualify for a private student loan if they need more funds for college, buy a new car, apply for a job or take out a mortgage for a house later in life. It is important to explain to your child that in order to establish good credit, they must pay their bills on time and in full.  Even a late phone bill can negatively affect their credit score.

5. Borrow what you need

If your child has taken out a loan for college, it is important to stress that they will need to pay back that money, along with the interest accrued, once they graduate.  With that said, it is key to emphasize that they should only borrow what they need or they will quickly find themselves under mountains of student-loan-debt situation after graduation. If your child finds him/herself in a situation where they need more money for school, there are other ways to fund their education than borrowing such as finding a job and applying for scholarships. If they do borrow, make sure to exhaust all federal loan options first, especially subsidized Stafford loans, which do not accrue interest while a student is in school.

Did you know that April is Financial Literacy Month? With the recent economic struggles, it’s clearer than ever that many students (and even parents) need some personal finance training, stat! According to the National Financial Educator’s Council:

“About thirty-four percent of parents have taught their teen how to balance a checkbook, and less than that has explained how credit card interest and fees work and ninety-three percent American parents with teenagers report worrying that their children might make financial missteps such as: overspending or living beyond their means.”

While parents can be a good starting point, “Around sixty-nine percent of parents admit to feeling less prepared to give their teenager guidance about investing than they do having the ‘sex talk’ with them.” Yikes!

In the spirit of Financial Literacy Month, we want to help you learn to manage your money! To kick things off, here’s a list of some great websites designed to teach you those much-needed money skills!

• 360 Degrees of Financial Literacy
• Practical Money Skills for Life
• MyMoney.gov
• Jump$tart.org
• National Financial Educator’s Council
• Schwab MoneyWise
• LearnVest
• Loyola University’s Financial Literacy Month Page

My mother always told me, “Don’t put it on a credit card if you can’t afford it in cash” and I’m free of credit card debt to this day! Share your wisdom and tell us some of your own personal finance tips by leaving a comment below!

Don’t forget to be on the lookout for more personal finance posts in the coming weeks or check out last year’s Financial Literacy Blog Series!

Source: http://www.financialeducatorscouncil.org/financial-literacy-statistics.html

Developing good saving habits starts when you’re young, but many students don’t know where to begin. While we know it can be tough to save money when college expenses keep growing, every little bit helps. Below are five ways to help you save right now and better manage your money.

1. Automate your Saving

If you receive a regular paycheck from a part-time or on-campus job, see if you can allocate a portion to automatically deposit in a savings account. It doesn’t have to be a lot, but by putting a little bit away into a separate account, you’re more likely not to spend it and can even earn interest on the savings.

2. Use your Tax Refund Wisely

Did you just get your tax refund or are you patiently awaiting its arrival? It might be tempting to spend all of the “extra” money right away, but don’t! Put it directly into your savings account to build interest for when you really need it. That doesn’t mean don’t treat yourself to something nice, just keep it reasonable.
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February 25 – March 2, 2013 is America Saves Week, and to kick things off, student loan giant Sallie Mae released a national study on how Americans save for college. In “How America Saves for College: 2013” the statistics show that although most families are optimistic about their college savings, few are taking advantage of their options today. According to the study “Most college savers remain optimistic about their ability to save and plan to increase their savings in the next five years, though two-thirds don’t have a plan to achieve their goals.”

How Families are Saving

Much of the data has been compiled into an infographic, which shows a variety of ways families save, and the types of accounts they’re using. Of the families saving for college, only 27% choose 529 college savings plans. Other savings vehicles include general savings accounts, checking, investments, and even retirement accounts.

Best Ways to Save

Parent-Owned Accounts
Savings in the student’s name is assessed at a much higher rate than parent savings when applying for financial aid. While a maximum of 5.6% of parent assets count against a family, a whopping 20% of a student’s assets are used in financial aid calculations. When possible, keep funds out of the student’s name, and take advantage of incentivized savings vehicles over checking accounts, for example.
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Student loans can be scary! Paying off thousands in debt is no easy task, and repayment can creep up on you if you don’t have a plan. So to keep you on track, here are 8 ways you can keep your loans at bay.

1. Know who you owe

With lenders buying and selling loans, the first step to know where your loans are. For federal student loans, borrowers can track their servicer information through NSLDS.ed.gov. Your loan servicer will be your main contact for making payments and for the day-to-day handling of your federal loans.

For private loans, you should consult their original loan paperwork. If this is not an option, request your free credit report. Your credit report will list all of your creditors, including private loan lenders.

2. Keep in touch

Now that you know who you owe, stay in touch. At the first sign of repayment trouble, contact your lender to discuss your options. Ask about different repayment plans, or if deferment or forbearance options are available.
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There has been a lot of talk lately about the financial literacy of Americans, and of the Millennial generation in particular. According to the National Financial Educators Council:

About thirty-four percent of parents have taught their teen how to balance a checkbook, and less than that has explained how credit card interest and fees work and ninety-three percent American parents with teenagers report worrying that their children might make financial missteps such as: overspending or living beyond their means.

To help combat the low rates of financial literacy, the Department of Education has recently launched a new Financial Awareness Counseling program. This online tool allows consumers to enter their student loans and other financial metrics to view reports on things like:

• Student loan balances
• Managing spending while in school
• Income and tax information
• Default avoidance

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Students who have received financial aid in the past know the drill – the financial aid office receives the funds, applies them to the student’s account for tuition, room and board, and other expenses, then returns the remainder to the student. In the past, students have been given the option of receiving the refund by check or direct deposit, but this year, there’s a new option across many campuses – a pre-loaded debit card.

The problem

These debit cards (often endorsed by the school) may seem like a great idea up front (easy, right?) but students are warned to be cautious if selecting this method. These cards can come with high fees that can eat into your federal aid funds! Not ideal for cash-strapped students. Fees include things like “$0.50 to swipe the debit card using a PIN number, inactivity fees of $10 a month starting as soon as six months and overdraft fees as high as $38 per transaction” according to the Huffington Post.
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Saving money can be time consuming, especially in the fast-paced life of college students. Luckily, we’ve put together a list of the best money-saving smartphone apps for college students! Forget clipping coupons, these mobile deal-finders will help you stay on top of your game, while keeping money in your wallet.

The best thing about these apps? They’re free!

Chegg

Any accounting major can tell you that textbooks are expensive. But they don’t have to be. Find the books you need for class through the Chegg app and rent right there or even compare prices!

GasBuddy

Gas is super expensive, so why not save a little money when you can? GasBuddy finds the cheapest gas prices near you so you can save on every fill-up.
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Welcome to the last post in this month’s financial literacy blog series! We’ve previously looked at student loans basics and interest rates, and covered budgeting in college. Today, I want to tell you a little bit about credit and break down student credit cards. While credit cards are scary and troublesome for many people out there, they don’t have to be. It’s all about being responsible!

Credit — What is it?

Credit can be summed up as a person’s reputation with money. It’s used by banks, landlords, and even employer’s to judge a person’s financial reputation. This means the better credit you have, the more leeway you have when getting a car, house, student loan, or job. Having and keeping good credit can save you money on those big purchases in your life, not to mention saving you the stress that often accompanies credit issues!
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When I was in college, the last thing I wanted to do was keep track of my expenses and create a budget. Booooooring. But now that I’m an adult (though it rarely feels that way) I’m finding it more and more important to keep track of money going in and out of my accounts. I wish this was something I paid attention to in college, because for someone with my level of disorganization, these skills could have been immensely beneficial.

While budgeting has not come as naturally to me as it does to others, here are a few helpful tips that have ensured I stay profitable over the years:

Needs vs. Wants

This one I learned at a young age. Growing up, my parents made sure I understood the difference between needs and wants (to the point where I now get anxiety if I splurge on a “want”). Without going this far, it’s important to realize what is considered a need vs. a want. Is it something that is absolutely necessary for school/living? This is probably a necessity if it will help you survive at college. While you may want the top-of-the-line technology, can you make do with something less expensive? Probably. Reign in the expenses by sticking to the lower-cost necessities.
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