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Posted 05 Aug 2001   For week ended July 27, 2001
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Sent on Mormon-News: 27Jul01

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:

  1. 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.
  2. Talk to your student now about how his or her funds will be divided among categories and set a plan to manage those expenses.
  3. 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.
  4. 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.
  5. 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


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