What do kids need to know about money when they head off to college? Here's what this year's Kiplinger interns -- Amanda Lilly , Deanna Pan and Michael Stratford -- had to say about key financial issues.
Deanna's parents taught her the importance of setting priorities: "Should I spend money on new clothes, or save to buy a new software program later?" That, too, carried over to college. "If students want to spend a semester abroad or in an expensive city like New York , they should save money by spending less on new clothes and eating out," says Deanna, a student at Ohio State. "Whenever I consider buying something, I always think about the opportunity cost."
When Michael Stratford went to orientation at Cornell University , he stopped at the booth of a local bank that was offering a $50 gift card for opening a new account. Michael soon ran through that -- and much more -- by racking up $40 overdraft charges on small purchases. "It was my first parental bailout," he says. To avoid any more, he opened an account at a major national bank with branches both at college and in his hometown so that his parents could make deposits if necessary. But it wasn't necessary; Michael also signed up for text alerts to help him keep track of his balance.
Bank fees are creeping up so pay attention to bank pitches that your student has been getting in the mail to find the best deal.
One of Deanna's older siblings ran up serious credit card debt when she was in school, so Deanna manages her monthly allowance with a checking account and a debit card. Amanda's parents gave her a credit card to pay for food, but she wishes they had made her keep track of her expenses. "They added up way quicker than I realized," says Amanda. "It's easy to get lulled into the mindset of endless money when your parents take care of your credit card."
I've heard this refrain from so many students (and parents) that my advice is to hold off on a credit card until kids have learned how to manage a checking account and can pay their own bills.
Amanda found that her "fun" expenses were higher than she expected, possibly because she went to school in a big city. "You want to do what everyone else is doing as a freshman, but be careful not to overspend just to fit in. It's sort of a balancing act."
Always buy used, advises Michael. That includes everything from books to dorm room furnishings. Don't bring anything but bare necessities and take advantage of yard sales at school after you arrive.