The day has come.  Your son or daughter is moving out.  Do they know how to manage their money?  If not, this is the perfect time to sit down with them and discuss money management. 

Many of our children already hold a job.  They learned the fine art of balancing a check book during math class in middle school.  A refresher course is in order!  Your child’s checking account will most likely still be considered a minor checking account, meaning you (the parent) still have access to their account.  I would consider keeping that checking account a minor account, which I will explain later in the article.

With most minor accounts, banks will not issue a check book, but rather an ATM Card or Debit Card.  Most of these cards carry the Visa or MasterCard logo on them and are accepted worldwide.  Upon use of this card, the money will automatically be taken out of the holder’s bank account.  If your student does not have a debit card, now would be a great time to get one.  Simply go with your student to your bank and ask for a debit card on the account.  At the same time, also make sure your student has access to their account online.  The bank will ask the student to enter a pin number, make sure your student understands that this is a number they cannot forget!

 The advantage of the debit card is simple, more and more retailers, restaurants, etc. have a “do not accept checks” or “do not accept out of town checks”.   I encourage those who do have a checking account and move to a debit card, that they continue to use their ledger to record their purchases and to SAVE THE RECEIPS!  Please, make sure your student understands, this card is not a credit card!  They need to know that anytime they use their debit card, the money is taken directly out of their account and generally the same day the transaction is made.

At the age of 18, your son or daughter will want their own account.  I feel it is wise to keep their minor account open and they can feel free to open another account in their name.  The advantage of keeping the minor account is varied.  If your student happens to run out of money, needs emergency money or is traveling abroad, the minor account will allow you to transfer money into their account.   If you are funding their minor account, the online access is nice to keep track of your student’s spending.

The first and foremost thing your student needs to know in regard to managing their money is how to balance their checkbook.  Take the time to ask them if they know how to balance a checkbook.  If they give you that blank, I have no clue what you are talking about look, it is time for a banking lesson.  In detail, explain to your student the importance of writing each transaction down in their check register.  They should also keep all of their receipts in one place.  Checking their bank account online once or twice a week is a good idea, if they are using their bank card on a regular basis. Checking the accounts frequently will also help them flag any transaction that doesn’t look right!  Make sure they understand to check their receipts against the online bank account.  Once those receipts have been confirmed online and written in their register, it is a good idea to shred the receipts.  Have your student sign up to get online bank statements, as their paper statements will be going to their home address if they are living on campus.  After they have reviewed the bank statements they can easily download the information into a program such a Quick Books or Quicken to reconcile their account.  Here is an easy to read guide on How to Balance Your Checkbook.

This practice is imperative for their future.  If they put these practices into good use, they will most likely continue to use these practices for managing money successfully for the rest of their life.

Did I say budget, yes I did!  If you plan on funding your student’s bank account, budget now.  Sit down and decide how much money you will be giving your student, either by month, quarter or semester.  Discuss the budget with your student.  Detail what the money is for.  In our situation, we will budget for personal hygiene products, items necessary for classes, such as notebooks, folders, etc. and food that she’ll need in her dorm to eat her third meal of the day (she is on a two day meal plan with the school).  This money will go into her minor bank account.  We did budget some fun money too, which she will get in cash.  This money can be used toward pizza parties, movies or an occasional meal off campus.  She understands that this money is not to be used on a shopping spree at the University store to buy the latest University logo items or going out to purchase the latest purse that “everyone in the dorm has!”   If she wants these items, she will need to shop for them with her own monies from her personal bank account.

I hope this article has been informative.  I welcome any feedback that you may have to offer in regard to Managing Money for your College Freshman.

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