TBO.com - TBO is Tampa Bay Online

Don't Delay Readying Finances For Your College-Bound Teenager

ADVERTISEMENT

By Steve Rosen McClatchy Newspapers

The Tampa Tribune

Published: May 18, 2008

If you're the parent of a soon-to-be high school graduate heading to college, congratulations are in order.

While your teen was busy with entrance exams and application essays, you made sure all the financial pieces were in place. You managed the financial-aid forms, weighed the loan and scholarship offers, eyeballed the returns on the 529 college savings plan and even hit the deadline for writing the first of many checks to State U.

Time to give yourself a pat on the back and take a breather? Not so fast.

Here's your next assignment: Over the next 60 to 90 days, tackle the myriad money management issues that will affect your teen as he or she prepares to leave for that idyllic tree-lined campus that costs a small fortune.

I've shipped off two kids to college, so I've experienced firsthand many financial issues that seem to crop up.

Here are some of my recommended topics to cover, along with input from Tom Wertz, another experienced parent with a college student.

Even if your senior is going directly into the workforce or striking out in another direction, the following financial tips could be valuable.

Set up your banking. Accessibility and simplicity are the key issues to consider. Most students don't write many checks, so you might be better off opening an account at the bank that has the ATM closest to campus.

Given the need to regularly transfer money to your college student, I'd also suggest setting up an online banking account. Many banks have special student accounts that also give parents access to the banking information.

Beware of credit card pitches. I call this the great T-shirt giveaway. During the first few days of school on many campuses, credit card issuers are on the scene pushing plastic. In exchange for the shirt or other freebie, the bank gets your student's valuable personal information on a credit card application. Even if your freshman doesn't accept the plastic, the bank still has the information.

I don't think most college students need a credit card at least until they prove they can manage cash responsibly, but they still need to know what they may be getting into. That includes monthly fees, charges for late payments, credit limits (no more than $500, in my opinion), introductory rates and cash advances.

Protect your privacy. A computer, MP3 player and miniature refrigerator may be on your student's list of dorm essentials, but a document shredder and small safe are on mine. Protect banking statements, PIN numbers and other sensitive data.

Check your insurance policies. Many homeowners' policies extend protection to your college student's possessions on campus, so you might not need a separate renter's policy. Check with your agent.

If your teen will have a car, your rates might change. Students driving in an urban area may pay more for insurance than drivers attending school in a smaller community or rural setting. But if your teen will not have wheels, you probably will be eligible for a premium discount. In my case, this discount knocked $120 off my bill for the year.

Assuming your teen is still facing finals, remind him about the financial consequences of slacking off. Bad grades could mean the loss of the "good-student" driving discount.

As for health insurance, Wertz recommends running the numbers on school-provided policies. That's what he did, and the school policy turned out to be a better deal than his own plan.

Figure out fun money. The College Board estimates budgeting about $3,700 for the school year for pizza, entertainment and personal expenses. That's about $350 a month. However, the figure I most often hear from parents is to budget $200 a month for incidentals.

Finally, don't let your new college student leave home without first discussing what will happen if - or should I say when - the money runs out before the end of the month.

Look at it this way - wouldn't it be better to offer a little parental financial advice on some lazy summer day rather than in the middle of a first-semester money meltdown? The time is now.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT