Apply financial wisdom for college students

FALLBROOK – Is a son or daughter in the house heading off to college? If the answer is yes, it’s an exciting moment in that child’s life, but, financially, it can also be a paralyzing time if they do not have a principled approach for managing money. Out on their own for the first time, the student has an opportunity to sharpen their financial skills for the future, but they are vulnerable to mistakes. Thankfully, regular chats about money can help get them on the right path. Here are some suggested financial topics to cover with a college-aged child.

Discuss expected financial contributions. College costs have skyrocketed in recent years. Tuition, room and board, books and travel can readily exceed $100,000 depending on what school the student attends. The family’s situation will dictate how they manage these costs. Students who carry some financial responsibility for their education tend to be more invested in the outcome. Before the child starts college, their parents should be clear about whether or not they are expected to share some of the costs and how much they need to contribute. If loans must be taken out for school, discuss who will be responsible for repayment after graduation.

Teach budgeting and spending. For many young adults, college is the first time they will be responsible for the expenses of daily living. Help the student create a realistic budget for campus life. Encourage smart decisions around discretionary spending. For example, it’s not uncommon for students with meal plans to eat out several times a week, but that’s an expense that can be avoided. Likewise, indulging in a latte or late-night pizza on a regular basis adds up over four years.

Review risks to their financial reputation. Help the student see how their financial actions in college can affect their future. Some employers run credit checks on prospective employees, meaning if the child has debt or unpaid bills, it can adversely affect hiring decisions. Landlords and mortgage lenders also look at credit scores. So, talk to the child about how to use credit cards responsibly.

Provide property protection. Most students bring a cellphone and a laptop to school with them. They may have other valuables that would be costly to replace. College campuses are not immune from theft. Let the student know they need to be vigilant about keeping their personal possessions safe. Discuss whether rental insurance makes sense. It may provide the protection the student needs while at school.

Practice daily account monitoring. Cell phones and laptops are not just for homework and social media. Help the student get in the habit of monitoring their bank account on their electronic devices. Daily check-ins can help students avoid overspending and spot fraud if it occurs. They also should take care to avoid using public or unsecured Wi-Fi when conducting financial activities online.

Set up financial check-ins. Talk about how to discuss money matters while they are away at school. Set up weekly or monthly financial chats so parents can review expenses, reset expectations, adjust budgets and so on. If problems arise, the family has a standing appointment to work things out. These conversations can help prepare the son or daughter for a relationship with a financial adviser. When the time is right, encourage them to find a professional who can help them set and achieve financial goals over a lifetime.

Steve Rohde is a financial adviser with Ameriprise Financial Services Inc. in Fallbrook. He specializes in fee-based financial planning and asset management strategies. He can be contacted at (760) 645-3735, toll free at (833) 645-3755 and at 1114 S. Main St. in Fallbrook.

Ameriprise Financial Services Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax adviser or attorney regarding their specific situation. Ameriprise Financial Services, Inc. Member FINRA and SIPC.

Submitted by Ameriprise Financial Services Inc.