College brings financial challenges
If youíre the parent of a child already attending or about to enter college, you probably have a lot on your mind. Thatís understandable. College is an exciting time of life, full of big choices and exciting opportunities. But letís face it, itís also a stage of life that can bring temptations ó money troubles in particular.
If you have a few concerns about how your child will handle their money in college, youíre not alone. Iíll never forget my own early financial experiences as a young college student ó or the day I opened my first credit card bill and saw what I owed.
ďMan, that was an expensive pizza!Ē
The folks who signed me up told me my credit card came with a free T-shirt and a pizza. I got both of those, but they were far from free. They came with consequences no one had warned me about. It started with a few thoughtless purchases ó a dinner out, a shopping spree for gifts ó but it added up quick.
Somehow, I hadnít realised the stuff I was buying and enjoying on credit was going to come due as a bill. Throw in the student loans I had taken on, and I was getting into some serious financial trouble. Before I knew what was happening, I was 19 years old, $25,000 in debt, and ó for a short time ó even sleeping in my car.
But hereís some encouragement. I made it all the way back, got out of debt, and learnt the right way to handle money. And your child can win with money, despite a world of pressure to do otherwise. Itís true!
As a youth pastor and speaker, Iíve met, worked with, and walked beside many young people who graduated college as strong budgeters, with a clear plan for the future and no debt. So can the college student in your life!
The Big Five
While your child is in college, they can lay a solid financial foundation by focusing on just five priorities for managing their money. With this foundation in place, at least two great things will happen for them: they will be in a strong position to build wealth throughout their life, and they will gain an awesome amount of self-discipline to help them in their career.
1. Save a $500 emergency fund. It might not sound like a lot. But $500 is usually enough to see a college student through most of the financial emergencies that come up, like a broken phone or computer. I know youíre going to want to help them out as youíre able, but itís also a great idea to let a young person feel what itís like to solve a money problem with their own money, instead of using yours or a credit card.
2. Get out of debt. You probably remember from your own time on campus that college students are a major target for credit card companies. Help your child understand that going into debt is no way to start adulthood. If they already have credit cards, encourage them to cut those up and pay them off. The sooner theyíre debt-free, the sooner they can begin using their money to go after their dreams.
3. Pay cash for a car. Most college students will need a car either right away or soon after graduating. But the need for wheels is no excuse to take on a big monthly payment. Paying cash will save your child a lot of money, and they will get a lot more enjoyment from something they actually own.
4. Pay cash for college. Youíve probably noticed student loans are getting out of hand in America. In 2016, The Wall Street Journal reported that the average college student is graduating with more than $37,000 in student loan debt to pay back. Thatís insane! Let your child know that paying for tuition and books is no different than paying for food and gas. By paying for college with cash theyíll immediately be able to use their pay for things they want, instead of paying off debt for years.
5. Build wealth and give. This one is my favourite, because thereís no better feeling than the one you get while using your money to help those you care about. As Jesus himself said, ďIt is more blessed to give than to receive.Ē And who has the most freedom to do a lot of good with their money? Those who have been fortunate enough to stay out of debt and build wealth.
One more tip: itís easy to assume you can only build this foundation if you begin early enough in life. Believe me, thatís not true. Itís never too early to start, but itís also never too late. Whether your child is just beginning to think about college, or is already enrolled, they can apply these principles to take full control of their money ó in school and beyond!
ē Anthony ONeal is the bestselling author of Graduate Survival Guide: Five Mistakes You Canít Afford to Make in College, and travels the country spreading his encouraging message to help teens and young adults transition into the real world. His latest book and video kit, Teen Entrepreneur Toolbox, released in April 2018. You can follow Anthony on Twitter and Instagram @AnthonyONeal and online at anthonyoneal.com or facebook.com/aoneal
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