PHOENIX–(BUSINESS WIRE) – For many teenagers, college is their first time making money decisions without parental help. But if they don’t fully understand how finances work, they leave themselves prone to costly and long-lasting mistakes.
“Many teenagers don’t intuitively know how to handle money. Therefore, it is critical for parents to sit down with their children and have an open and honest conversation about financial fundamentals, ”said Michael Sullivan, personal financial advisor at Take Charge America, a non-profit credit counseling and debt management agency. “Providing this foundation gives children the confidence to better understand their financial decisions and manage their money properly long after college.”
Sullivan shares four money conversations parents should have with their college teens:
Budgeting: Regardless of your income, a budget is the foundation of good money management throughout your life. It helps keep track of income and expenses while providing a plan of action for achieving financial goals and preventing you from spending too much. Parents should explain the concept of needs vs. wants and help students start budgeting with a spreadsheet or apps like Mint or EveryDollar.
Be careful with credit cards: Many college students have problems with credit cards. Talk to your teen about the potential implications of opening multiple cards and the importance of paying on time each time. To help your teen build funds, you should help them open a secured credit card or add them as an authorized user on one of your spending limit cards. For additional resources on loans, parents can visit Take Charge America’s Financial education center.
Identity theft: Explain the importance of protecting financial information, including bank accounts, credit cards, social security numbers, and other personal information, from fraudsters and identity thieves. Remind your children never to give such information to anyone they do not trust, especially if they are contacted by unsolicited phone calls, emails, or text messages. If you fall victim to identity theft, it can negatively affect your child’s financial life for years.
Student Loans Interesting Facts: If your teen has taken out student loans, talk to them about expenses such as tuition, books, and housing. Emphasize that student loans are not free money to be spent on travel or shopping outside of school. Explain how, unlike scholarships or grants, they are responsible for paying back student loans with interest when they leave school.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a not-for-profit agency providing financial education and advisory services, including credit counseling, debt management, student loan advice, housing advice, and bankruptcy advice. It has helped more than 2 million consumers across the country manage their personal finances and debts. To learn more, visit takechargeamerica.org or call (888) 822-9193.