Avoid the Financial Freshman Fifteen
Back to school means new clothes, new classes. For college freshmen looking to manage their own finances often for the first time, heading to college can often mean a lot of unexpected expenses and new debt.
Quicken, maker of the best-selling personal finance software in the US, recently surveyed over 1,000 college students and parents to get a better sense of how they’re tackling money management.
We all know college is expensive — but parents are still surprised.
Almost half — 44% of those polled — said that their child’s education was more expensive than they expected
Parents are confident — but kids still stumble.
The majority of parents, 63% of those polled, rated themselves confident or very confident in their children’s ability to manage their finances in their first year of school.
Despite this, over a third of students polled (35%) said they incurred unexpected debt in their first year of school.
One statistic that may help explain the disparity between confidence and stumbles: Almost one in three (30%) of said they hid the debt they incurred from their parents.
Credit cards and banking fees add up fast.
Credit cards can be a slippery slope for a newly-minted adult. Forty percent of those who signed up for credit cards during their first year of college say they regretted the decision.
Even navigating a bank account can be expensive. Nearly a third (27%) of college freshmen incur banking fees in their first year of college. How much in fees? 37% said they incurred over $300 in fees, and 1 in 10 said they incurred $1,000 or more.
5 Tips to Avoid the Financial Freshman Fifteen
So how can parents prepare their kids to avoid a financial freshman fifteen? Some tips:
1. Avoid the free t-shirt
While college students are often wooed by credit card companies with the allure of swag and other perks, signing up for credit cards can be a slippery slope. While you help your inbound student pack, make sure you’ve covered the basics about credit.
2. Be careful with recurring fees.
It can be tempting to get that free month of streaming music or premium TV just for signing up. But forgetting to cancel can lead to unexpected charges hitting your bank account on a monthly basis.
3. Plan for expenses.
Managing day-to-day expenses is just the beginning — preparing for, and setting aside money for, big twice-yearly expenses like books and class fees is critical. This college budget template will help students plan ahead.
4. Take advantage of student perks.
Everything from flexible college meal plans to discounts on local stores, movie theaters, and software are available to college students who take the time to do their research.
5. Keep a budget and check it regularly.
Creating lifelong habits around financial management starts now — parents might consider a money management tool like Quicken as a great graduation gift for high school seniors.
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