By Paul Carter
College Is School of Hard Financial Knocks for Unprepared
DALLAS, TEXAS -- The Dallas Morning News this week mentions an LDS family's
efforts as a good example of how parents can prepare their teenagers for the
barrage of offers on college campuses by credit card companies and
strengthen their students against the temptation to own the many clothing
and technology status symbols that are "must-haves" in dorms and in the
classroom. The high school graduates of 2001 are just a few weeks away from
starting their freshman year of college. The Morning News says that in the
short time remaining, parents need to set the ground rules for money matters
to make sure their student is prepared for the financial enticements and
challenges that are a part of today's time away at college.
Kingston White of Duncanville Texas is 18 years old and headed to BYU this
Fall. Kingston's father Philip and mom Carol have six children. Kingston
already has a credit card, which he knows is to be used only in emergencies.
Any balance must be paid off by the end of the month.
Kingston is better prepared than most beginning college students, with
savings of $4,000 from jobs while growing up. He says that his parents
"always told me to save, always to have a savings account and to live within
your budget. I don't spend money on stupid stuff that I know I don't need,
and I don't spend any money that I don't have."
The Whites have taught financial responsibility throughout the lives of
their children and provided incentives for them to save. In order to drive
the family car, each youth driver has had to have enough money in savings to
cover the insurance deductible in the event of an accident. Any request for
a loan from dad usually requires collateral.
When a family member opens a savings account, deposits funds, and doesn't
spend the funds for a year, Dad adds to the account a matching amount. Being
responsible for the financial impact of your actions and being rewarded for
good financial decisions are principles with high visibility in the White home.
Financial lessons are some of the hardest to learn. Learning these lessons
when you are away at school, under siege with offers of free t-shirts and
other give-aways if you will open a credit card account, can be bitter
lessons indeed. Better to learn at home according to Carol. To teach the
lessons requires standing firm on budgets and rules about spending and
saving. "One of the hardest things to do as a parent is to carry out what
you said you were going to do. In the end," says Carol, "the world is going
to teach them, whether you did or not."
The objective of these financial lessons is that students away at college
will manage their money wisely. In the course of its article, The Dallas
Morning News offers some ideas to help college students with their finances:
- Create a budget with your student before school starts. Involve him or her in identifying what purchases are going to be required including clothing and entertainment.
- Talk to your student now about how his or her funds will be divided among categories and set a plan to manage those expenses.
- Prepare your student for the credit card company offers. Help them to understand that it is the student's responsibility to pay for every dollar that is spent on a credit card one day--and they'll be paying more because of interest.
- Consider providing your student with what is called in the article a "stored value" card which allows purchases only for amounts that have already been paid into the credit card account.
- If pre-set budget amounts actually turn out to be unrealistic, parents should be open to having their student justify any unforeseen needs. But the student needs to present a very strong justification.
Parents need to teach children how to handle money before college
Dallas Morning News 23Jul01 P2
By Pamela Yip