From Piggy Banks to Bank Accounts: Parental Financial Advice for College-Bound Students

Published on August 21, 2024 | LPL Financial

Although many teens are loath to admit it, they rely heavily on advice from trusted adults in their lives—especially their parents. As these teens begin moving out and heading to college, it becomes even more important to set them on a good financial path. Below are seven key pieces of advice every college student should hear from their parents.

You Need a Budget

Encourage your child to create a budget to track their income and expenses. Help them understand the importance of living within their means and prioritizing essential expenses like tuition, housing, food, and transportation.

Avoid Consumer Debt

Without a solid budget, it can be easy to fall into the consumer debt trap—paying with plastic just doesn’t have the same impact as handing over hard-earned cash. With rising costs of food, housing, and college tuition, it’s increasingly easier for young people to take on too much debt when striking out on their own.

Discuss the dangers of taking on excessive debt, including student loans, credit card debt, or personal loans. Encourage your child to minimize the amount they have to borrow at a young age. Your child should also explore any available alternatives, like scholarships, grants, part-time work, or community college, to reduce the need for student loans and credit debt.

Build Credit Responsibly

Teach your child about the importance of building and maintaining good credit. The easiest way to do this is by paying all bills on time, keeping any credit card balances low, and avoiding unnecessary debt. If you have good credit, you can add your child as an authorized user on one of your cards to start building their credit history.

Save for the Future

Encourage your child to start saving for their future goals as early as possible. Discuss the benefits of compound interest and the power of regular contributions over time.

Invest in Career Development

Emphasize the value of investing not just in an education but in a lifelong career. The college years are the perfect time for your child to increase their future earning potential and expand the universe of job opportunities. Encourage your child to explore internships, co-op programs, volunteer opportunities, and networking events to gain valuable experience and skills.

Understand Financial Aid

Teach your child how to fill out the Free Application for Federal Student Aid (FAFSA). Filling out the FAFSA accurately and on time will maximize their eligibility for financial aid. You and your child should also understand their financial aid options, including grants, scholarships, work-study programs, and student loans, so you can make the most informed decisions about the cost of attendance.

Protect Personal Information

Teach your child the importance of safeguarding their personal and financial information, especially Social Security numbers, bank account numbers, and passwords. Remind them to be suspicious about being asked to share information online. Your child can also sign up for programs and services that will monitor their accounts for suspicious activity, including identity theft.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by WriterAccess.

LPL Tracking #588335