You’ve been preparing for this moment for years. The cap and gown are purchased. The open house is scheduled and the road trip to college is dreadfully planned. Your child is officially an adult. But wait…what about credit responsibilities? College students should learn the fundamentals of establishing credit before entering campus.
Like most parents, you want to lead by example. Unfortunately, that hasn’t always been the case when it comes to paying bills and saving. Students often emulate their parents behavior. With that being said, you may want to have the “do as I say, not as I do” discussion about taking advantage of the time to save and invest in their future.
Now that the Credit Card Reform Act has limits on banks and credit cards for students under the age of 21, parents/guardians are “forced” to educate and establish financial boundaries. This is a oppurtune time to discuss the ABC’s of credit. Have an open discussion focusing on financial empowerment.
The best credit cards for college students considers on-campus living, rebates, dining out, furnishing own apartment and more. You want to make sure that your credit card is going to be the best fit for your new college student.
To further assist with you the ABC’s of financial responsibility, we listed a few:
A= Always pay your bills on time
B= Balance your checkbook
C=Cash is king
D=Don’t engage in emotional spending
E=Eat out only when necessary and budget to do so
F=Free isn’t always better. Don’t sign for a credit in order to receive an additional percentage off merchandise
G=Get it in writing and read your terms
H=High balance will harm your FICO score. Maintain less than 30% balance on credit cards
I=Interest rates are determined by your credit responsibility
J=Juggling too many cards isn’t wise. Begin with one major credit card
K=Keep an accurate record of your purchases.
L=Learn more about establishing and maintaining credit by reading
M=Money deposited to your account (direct deposit) from an employer won’t spend as quickly
N=Never use your credit card when you have money in your pocket
O=Open a savings account to save form an emergency
P=Put your loose change in a jar; it will add up
Q=Quit purchasing items because you have plastic. You have to pay it back w/ interest
R=Refrain from opening multiple credit accounts
S=Start an IRA account
T=Time! Time! Time! Pay your bills on time
U=Understand your potential in life and all that you have to offer
V=Very knowledgeble about your financial future. Don’t take out more credit than you can’t afford to pay back
W=Waste not! Don’t define yourself with material possessions
X=”Xtra” money should go toward your savings or a budget
Y=You are responsible for your mistakes
Z=Zealous behavior will cause you to make rash financial decisions
Parents, it’s also wise to open a joint account so that you’re able to monitor until you feel that your new college student is financially responsible. Remember, you don’t have to be on the account in order to make a deposit. You only have to know the account number.
“Love yourself enough to support yourself.”
Property of SMG, LLC
Reported by Bahiyah Shabazz, MBA