How to Teach College Students to Handle Money

Your College Kids Can Learn to Manage Money

Your child is going off to college soon, the acceptance letter has come, the living arrangements have been made, and now you need to decide how to help your student manage money. Should you pay for everything? Should they have a credit card? Should you give them an allowance? Should they be responsible for handling any of their own bills? Learning how to handle money is one of the most important things an 18-24 year old can learn. In fact, no matter what else they learn while they are in college, if they don't learn how to handle their finances, they will have problems getting along after they graduate. As an educator and mother who sent two daughters and two step-daughters off to college, here are some suggestions that have been helpful in getting our daughters off to a good start after college.

Money Management is One of the Most Important Skills You Can Teach Your Children

Every teenager and college student needs to learn age-appropriate information about managing their money.
Every teenager and college student needs to learn age-appropriate information about managing their money. | Source

Become Less Involved in Their Finances

During the next few years you are going to teach your student to stop expecting you to pay for everything, and that they need to become responsible adults who can handle their finances alone. No college graduate can be successful if he hasn't learned this lesson. While each situation will be different, depending on whether your child is working part-time, and whether they live in a dorm or apartment, there are certain guidelines that you will find helpful. Your goal is to make them as responsible for their everyday college expenses as possible. They need to be involved when you sign student loan papers. They need to be fully aware of how much everything costs, and what loans they will be expected to pay back themselves after they graduate.

As they get older, whether they are still in college or they are new graduates, you will want to get them the Suzi Orman book, "The Money Book for the Young, Fabulous and Broke." (Advertised here) It is a book they can read one chapter at a time as they go through life and need to know how to buy their first car, buy their first home, get their first 401K, sign up for profit sharing at their first company, etc. We bought a copy of this book for our youngest daughter and she was so happy with it that she bought copies for her older sisters! You can order the book below, directly from Amazon.

They Can Handle Their Monthly Expenses

Rather than paying every bill for them, it is much better to give them the money for their monthly expenses and let them pay for their own rent, bills, and school supplies. Be sure they have a reasonable amount of money each month to cover their expenses. After that, they need to set up a budget to make certain that they have enough money left over for entertainment, restaurants, sporting events and other things they want to do.

It is important to realize that THEY WILL MAKE MISTAKES. That is why it is so essential that students have this time to practice handling money while they are still in college. Try to bail them out as seldom as possible, and let there be consequences when you do. For example, when one of our daughters over-extended herself buying clothing on her credit card, we paid the card off for her so interest would not continue to accumulate. However, in return she had to turn over to us nearly all her paychecks from her next summer job. We did not simply "forgive" her loan. We understood that young people are going to make mistakes and so we helped her out, but she did have to suffer the consequences of that help. She has now been out of college for eight years, and has never over-extended herself again.

Student Checking Accounts and Credit Cards

Despite the fact that they will mishandle their money from time to time, it is still important that they have a checking account and a credit card. Learning to balance a checkbook, make purchases with a credit card, and pay their own bills are essential lessons that are as important for their future as anything else they will learn while they are in college. Be cautious, though. Under today's new, stricter guidelines for credit cards, most students will need to have their parents co-sign. Be sure there are reasonable limits on the card and that your student understands that they must abide by those limits. You don't want to be on the hook for any excessive purchases!

Overall Financial Advice for Students and Parents

Once you have included your young adult in the student loan process, helped them work out a livable budget, turned over their monthly bills to them, and helped them set up a checking account and a credit card, your student will be prepared to handle their own finances. Financial literacy is an ongoing process, and is not something that will be accomplished in a couple of months. However, you have taken reasonable steps to get them started.

In addition, I recommend that you purchase your student a good book on money management about the time they graduate from college. One example is Suze Orman's book, "Young, Fabulous and Broke." One of our daughters received this book at graduation and she appreciated it so much, that she gave copies to her sisters, too. It explains everything that a young adult should know ... from contributing to a company 401K, to the financial information they will need to know before buying a house or car.

I have always been told that “The purpose of a parent is to raise children who do not need them anymore.” If you follow these steps with your college age children, you will be well on your way to accomplishing that goal.

Send Them Off to College With This Book

Money Management for College Students
Money Management for College Students

Far too many college kids have no idea how to manage their money. This book will give them a good foundation.

 

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Comments 18 comments

Au fait profile image

Au fait 3 years ago from North Texas

Good suggestions and advice here. Very true that if a child can't manage their money by the time they graduate college, they will have a harder time being successful.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

Thank you for reading this. I hope that more parents will take the time to teach their children to handle money. It may be one of the most important skills they can pass on to their children.


Vinaya Ghimire profile image

Vinaya Ghimire 3 years ago from Nepal

Deborah,

I wish someone had told me this when I was in college. I believe parents of teenagers will find this very useful.

PS: Thanks for reading and commenting on my bonsai hub.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

I'm glad you found this information about teaching college students to handle money to be useful. I wish more parents thought about this when they send their kids off to college. It would help a lot more young people succeed after they graduate. Thanks for reading and commenting on this.


moonlake profile image

moonlake 3 years ago from America

Very useful hub. All college students need this information.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

I agree that learning how to handle money is one of the most valuable skills a college student can learn.


Au fait profile image

Au fait 3 years ago from North Texas

This is a good hub for people to help their young adult children learn to manage money. The earlier young people learn these lessons the happier their lives are likely to be.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

You are so right that young adults who have learned how to handle money are more likely to have a happy life! As a parent, I am really happy about how well our children handle their money today. It gives me confidence that they will be OK, even when I am no longer alive.


Au fait profile image

Au fait 3 years ago from North Texas

Lots of young people heading off to college in just a couple of weeks. This article might be a help to some of them or their parents who hope to impress on them that there's no money tree. :) Sharing.


Au fait profile image

Au fait 3 years ago from North Texas

First time college students have by this time gotten a taste of managing their money in a way different from when Mom and Dad were there to help. This may be a good time to review this article, especially if things aren't working out ideally. This is also that time of year when there are more than the usual expenses because of the holidays. Lots of good ideas here for both young people just starting out and parents who want to guide their children to successful money management.

Sharing again. Also just realized I had not pinned this important article so I have corrected that and this article is not pinned to my 'Financial Issues' board.


vespawoolf profile image

vespawoolf 3 years ago from Peru, South America

I have friends whose children are in college and I think your suggestions are valid. At some point, parents need to let their children grow up and take responsibility for their actions. That is the case with management of their funds. Thank you for sharing!


Au fait profile image

Au fait 2 years ago from North Texas

I guess managing a reasonable Christmas budget could be part of this lesson of learning to manage/handle money successfully. Maybe a little late for this year, but better late than never. Christmas is ever so much more enjoyable if one doesn't have to take out a second mortgage or go through a bankruptcy as a result of overspending. Have this year's Christmas bills paid by the time next Christmas rolls around is imperative.

A really good article for parents and teenagers to read and digest, and good information that will last a lifetime.


Tolovaj profile image

Tolovaj 2 years ago

When I think about my school and student years, I recall very stormy financial times in our country (we had hyperinflation, for some time we calculated everything in German Marks, then we had our own money (Tolar) which was introduced in two phases and finally Euro. This was time of great opportunities and a free spirit (most students are free spirited) could use many of them. This was also time of introduction of Stock Exchange and other novelties, when I learned a lot from my mistakes.

I believe learning from mistakes is best learning, but if you can learn from other people's mistakes it is even better. Parents can be of big help here. They are always role models for children and can serve as best examples.

Thanks for the tips!


Lady_E profile image

Lady_E 2 years ago from London, UK

Useful tips for a very important aspect of life. Thanks


Deborah-Diane profile image

Deborah-Diane 2 years ago from Orange County, California Author

Thank you, Lady_E ! I think this is so important for young people to learn, if they want to have a happy, satisfying life!


Deborah-Diane profile image

Deborah-Diane 2 years ago from Orange County, California Author

One of the most important things college students can learn is how to manage their money. The skill will last them the rest of their life!


ezzly profile image

ezzly 22 months ago

Excellent piece , so going to show this to my husband who is a "mature " student lol ! Voted up and sharing on twitter


Deborah-Diane profile image

Deborah-Diane 22 months ago from Orange County, California Author

No matter how "mature" we are, its never too late to learn how to handle money!

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