Discussing finances with your freshman

For many young adults, heading off to college is their first real taste of independence—even if they might still be depending on mom and dad for financial help. Talking to them about finances—the realities of living within a budget and how to avoid certain pitfalls—can help ensure their college experience is a milestone to remember.

Budgeting

Whether you’re paying for all or part of their schooling, or if they’re relying on student loans, it’s important to set down spending boundaries by creating a budget. Have a discussion about what costs you’re willing to cover, and what costs they’ll have to figure out on their own. Clear expectations can prevent an uncomfortable conversation from having to happen in the future.

Unexpected costs are a part of life. No matter how detailed your initial budget may be, be prepared to make adjustments when you’ve figured out the real costs that are going to be incurred while your child is away at school.

Keeping an accurate budget is easier than ever with today’s budgeting apps. The Global CU app has a variety of customizable budgeting tools to help your child keep on track.

Banking

Setting your college bound child up with a savings and checking account for college related costs can make life a lot easier for both of you. If your child is planning on working a job, they’ll have a place for their paycheck to be directly deposited. If you’re planning on helping with costs, you’ll also be able to deposit or transfer money into their account.

Using the Global CU app will allow your or your child to easily set up recurring payments for known monthly costs, ensuring a late payment won’t have a negative effect on either of your credit down the line. It’s also a quick lifeline to your child should something unexpected occur in either of your lives.

Planning

The importance of having an emergency savings fund cannot be overstated. Minor to major medical emergencies, car repairs, unexpected travel needs—even though college is a major milestone, the everyday realities of life keep chugging along. The peace of mind you’ll get from knowing there is money set aside for these kinds of expenses is priceless.

If your child has direct access to an emergency fund account, have a conversation about what kinds of events constitute an emergency so the funds are there when they’re really needed.

Common pitfalls

• Everyday costs are often overlooked when starting an exciting new adventure like college. But just because something new has come into your life, it doesn’t mean you can ignore the daily cost of living. Car maintenance and gas, phone, internet, and streaming service bills, new clothes, or even just paying for a fun night out can be costs that aren’t accounted for that will nonetheless pop up from time to time.
  
  
  • Try and incorporate as many of the regular costs of living into your budget as possible or add them in later as they appear. Adjusting your budget to fit the realities of everyday living is important to staying on the path to financial success.
    
    
• Credit cards can be your best friend—or your worst enemy. When used properly and paid off regularly, you can earn travel rewards or other benefits. But too often, a young adult can see credit as a source of consequence free money. The future may seem far off when you’re young, but parents usually have the experience to understand how choices made with credit now can have a serious impact on your credit worthiness down the line.
  
  
  • Talk to your kid about the importance of credit and how it can impact their future plans for buying or renting a home, purchasing a car, or even getting new credit cards.

Start the discussion today

Going to college is exciting—and more than a little anxiety inducing for parents. Even though having a frank discussion about money can seem uncomfortable at first, having the talk now can save both you and your child from having a heated argument in the future. Start the conversation before they pack their bags.

You’ll both be glad you did.