It is never to early to teach your children to build a strong financial foundation.
I recently had the privilege of speaking at a leadership conference to a group of university students. The students were very engaged around my topic of Financial Literacy for College Students. Since this is the time of year we send our children, grandchildren or other family members off to college, I thought it would be appropriate to share with you some of the key points from my talk.
Here are some key financial tips to help your college student build a srong financial foundation to stay on track financially:
- Create a monthly budget-Regardless of what their income sources are it is important to start with a monthly budget. Creating and following a budget will not only help them track where there money is going but it will also identify where their money is being spent. Creating a spending plan also helps them identify areas where they can potentially reallocate to fund their goals . Creating and tracking their spending doesn’t have to be time consuming or expensive. There are free programs such as mint.com . Here is a good article from the Daily Worth website outlining some of the best applications, 7 Top Money Management Apps .
- Use Credit Wisely-As I gave my talk, it was interesting how many questions centered around credit cards and debt.If your student doesn’t already have a credit card, he or she will probably get one in college. It is important to use credit wisely. They should not charge anything that cannot be paid off monthly. It is also important to understand good verses bad debt.While it is ok to charge the textbooks but it may not be a good idea to use the credit card for that Friday night pizza party.
- Set clear financial goals-Yes, college students should establish some financial goals. For example, if they are working, it is a good time to set up an IRA.
- Create a savings plan-It is mportant to create an emergency fund. This will prevent them from having to use credit to cover unexpected expenses. By creating and following their budget,they can set aside extra funds to the savings account.
- Stay informed-The key to being good with money is to continue to learn. It would be a good idea for your student to take a personal finance class if offered at their university. They can also educate themselves by reading financial magazines and/or financial websites. One site that provides good financial information to consumers is nerdwallet.com.
As you send your child off armed with the tools to be a successful student it is also important to give them the tools they need to get a head start on being successful financially.