Over the next few weeks, millions of college students will be heading off to school. If there's one in your household now is the time to "the talk." You know - the talk about money. Stephanie AuWerter, Editor of SmartMoney.com has some tips.
First, create a budget. "A lot of parents aren't sure what is the right amount to give their child, so start with your financial aid office. They should be able to offer you some guidance," says AuWerter. Be sure to outline the budget with your son or daughter and stick with it! Don't crumble when your child calls asking for money. They won't starve - remember, they have a meal plan!
While some parents shy away from giving college kids credit cards, AuWerter suggests that finding the "right" card can teach your student some important financial lessons. "Eighty percent of Freshman have credit cards, fifteen percent of them have four or more cards, which is just disturbing," says AuWerter. "The best card for most college kids is simply going to be the card with the lowest interest rate."
Talk to your kids about credit card gimicks like free T-shirts or gift bags. But not all rewards are bad. One rewards card AuWerter recommends is the Citibank MTVU card. "Here, you get extra rewards - extra bonus points - if you maintain a certain GPA and you pay your bill on time,' says AuWerter.
Unfortunately, college kids get socked with higher interest rate than other folks, since they have no credit history. Don't be tempted to co-sign for your child's credit card. "Even if you think your child is completely responsible, you don't want your credit history tied to an 18-year-old," says AuWerter. Here, if your child is late on a payment, your credit score can suffer and you may have the creditors coming after you!
While your child is learning about credit, why not teach them about identity theft too? There's loads of personal information floating around campuses and college kids aren't likely to think about protecting themselves. Be sure to purchase a paper shredder for your child and teach them when to use it. "Make sure that your child knows to really guard their social security number," says AuWerter. Explain to them that it's unwise to use their social security number as an I.D. or pin number. Also, be sure you child isn't using their social security number to check grades online.
Finally, review insurance policies before your child leaves for school, starting with your auto insurance policy. If your child is not going to take a car to school and the school is more than 100 miles away from your home, you could be eligible for a significant discount. Also, if your child is going to be living in the dorms, check to see if your homeowner's policy will cover the items taken to school. "If they're living off campus, see if you should have a renter's insurance policy," says AuWerter.
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By Stephanie AuWerter
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