The month of May for most high school seniors and their families is filled with celebrating the end of one journey and planning the beginning of another. The senior year kicked off with great expectations of high achievements, new freedoms, accolades, and a great prom all culminating into graduation night.
Once the cap and gown are returned to the closet as memorabilia planning toward college becomes the immediate focus. Navigating new financial waters will soon begin for your new graduate; let’s look at five truths to help your college student make wise financial decisions.
1. Budgeting - Managing money as a college student can be a constant struggle. Whether your child has a job or you give them a monthly stipend, for every college-bound student, learning how to establish and live within budget boundaries is a necessity. There are several great free apps available to help college students keep track of their finances and identify areas where spending cuts need to be made. Five of the top spending apps I encourage you to explore are: Mint, Toshl, Left to spend, Debt payoff planner, and Check.
2. Managing Social Spending - There are numerous social opportunities to explore as a new college student. Discernment is required when making commitment decisions, as many come with a significant financial obligation. For some students, fitting in and finding acceptance is a top priority used to justify the added expenses for new clothes, nicer things, and additional spending on social opportunities and all to keep up with the “status quo.” Remind them often their identity comes from who they are in Christ and NOT what the next dollar bill will purchase.
3. New Debt - Some credit card companies target college students by offering new credit with minimum qualification. For new students, it is important they understand the financial principles of how to manage credit-card debt and the ensuing payoff principles. With student loan debt on the rapid rise, it is of most importance students learn how to manage debt wisely; otherwise, they may be saddled and stifled by overwhelming debt for many years beyond college.
4. Managing a Debit Card - It is important for them to learn how to keep a transaction log of their spending. Creating an excel spreadsheet or using one of the apps mentioned above will help them keep track of their everyday expenses. It is important for you and them to understand the new fees that come with overdraft protection plans. These fees accumulate quickly and before they know it they can find themselves in a deep hole holding a small shovel.
5. Tithe- Save- Spend - The simple principle of tithing ten percent first, saving ten percent second, and living within the remaining eighty percent is the goal. It does not matter if they are earning it with a job, receiving it from you, or living off student loans, the sooner they understand this principle the faster their financial future will be blessed.
God understood the temptation of the world to make money its’ “idol.” As parents, it is our responsibility to train and encourage our kids to crave the wisdom of his word.
Blessed are those who find wisdom, those who gain understanding. - Proverbs 3:13 (NIV)
Help your student understand the importance of following the Biblical principles of financial management. When keeping up with the money-side of college feels overwhelming remind your student, God will freely give them the wisdom to manage their spending all they have to do is ask. Once they learn how to manage their finances well, they will find these same management principles will spill over into other areas of their life. Financial guidance is truly a gift, when given to a child, will keep on giving for many generations to come. Watching your child take on this responsibility will also give you great pride as a parent. Good job coach!
Guy Hatcher: The Legacy Guy® – is passionate about helping families plan their legacy. His book, Your Future Reflection: How to Leave a Legacy Beyond Money, is available at amazon.com. Follow him on twitter @guyhatcher or contact him at www.guyhatcher.com.
Publication date: May 16, 2016
Photo credit: ©Getty Images/Rattankun Thongbun