WASHINGTON — As fall approaches, many teens will be heading off to college, living away from home for the first time. Among school supplies and a mini-fridge, they’ll need help navigating a new world for financial independence.
Janet Bodnar, editor of Kiplinger Personal Finance, says that while many parents will be covering big-ticket items such as tuition, room and board, many teens will need help managing their spending money.
“[Parents] should help their kids at least set up a checking account before they head off to college to manage all of the spending money,” Bodnar said. “You really want to make sure the kids get off on track. They know what they have to pay for and they know how to manage that account so that they’re not going to overdraw it.”
When it comes to managing that checking account, technology has made it more convient. Balance checks and transfers can come with the swipe of a finger. This can make it easy for teens to be aware of how much money is in that account, but Bodnar said that there can be a downside to that simplification.
“You don’t actually have a sense of how much money you’re spending, so that’s kind of the downside of it,” she said. “Sometimes it really makes sense to do things like save some of your receipts so you actually know how much money you’re spending.”
Many parents choose to send their child to college with a credit card linked to their account, either in lieu of a debit card, or to use for emergencies or as a safety net while the child is learning. However, Bodnar says that those cards can do more harm for the parents than good for the kids.
“Parents sometimes think ‘Oh, I have to give my kid a credit card for emergencies’ — no you don’t. There are plenty of ways to get your kids money if you really need it, and for kids an emergency is a new dress for the sorority dance or buying pizza and beer for the guys on the weekends.” said Bodnar.
Then main goal is to teach teens how to manage their own finances, and not fall into bad habits that could cause problems.
“You don’t want to overdraw your allowance, you don’t want to spend all your summer earnings in the first month, and you certainly don’t want to run up a credit card bill,” said Bodnar.
