Top 3 Lessons Parents Need to Teach Their New University and College Students

Top 3 Lessons Parents Need to Teach Their New University and College Students

Colleges and universities are supposed to inform their students of the full cost of attendance, including all tuition, book costs, and living expenses – and generally, they do a good job of highlighting the big-ticket items. But first-year arrivals still have a lot to learn about managing those daily expenses that can easily become a source of considerable stress. It’s hard to suddenly live on a set budget if you’ve never really lived on your own before.

If you’re a parent with a first-year student moving into residence or an off-campus apartment, it may be time to sit down with your young adult and run through a few financial dos and don’ts. It can be easy to overspend or even turn to borrowing unnecessarily when you don’t have any experience managing cash. But follow these tips so you and your child know what to expect and avoid running into any surprises.

Lesson #1: Establishing a budget

If you’re taking care of their expenses, rather than give them a year’s worth of capital upfront and letting them run wild, consider establishing a month-to-month budget with your student. Try transferring a certain amount of money on the first of each month to cover certain expenses, and insist that they keep track of all transactions. While you may still prefer they do this by hand, in this age of technology, they’ll likely be more comfortable using colourful cash management sites like Mint or an app like Goodbudget.

From the outset, make sure they know how much they can safely spend each week, after factoring in rent, food, school supplies, clothes, travel, phone and internet bills, utilities, and even music streaming subscriptions. Because the fact of the matter is that your child is most likely going to want some money for entertainment purposes. Keep in mind that costs during frosh week will likely be much higher than an average week on campus. Once they’ve settled in, though, take the time to review their spending habits using their bank statements to check the budget.

And remember, don’t be overly critical when you spot an error. This is another learning opportunity and their first steps to becoming a financially responsible adult.

Lesson #2: Maintaining their own household

Living on campus is a significant part of the university experience, and first-year undergraduate students are usually guaranteed a place in residence. As a result, they don’t need to worry about making arrangements for their own electricity, laundry, or food for that matter, since most schools insist that students on residence sign up for a meal plan.

If they do end up living off-campus with roommates, however, things get much more complicated. With billing for utilities done under one name, and only one or two roommates on the lease, keeping tabs on the money flow isn’t easy. One good way to manage money is to set up a pool so everyone contributes to the essentials – toilet paper, coffee, bread and milk, etc. It’s a good way to avoid buying too many of the same items unnecessarily and ensuring that one person doesn’t end up footing too many costs.

When it comes to paying bills, suggest to your child that receipts are set aside for reference to avoid arguments when it comes to settling payments. An app like Splitwise lets users easily add roommates based on phone number or email, input the total amount of a bill and a description, and divide equally by a percentage or “shares.” It does the math, and also sends notifications and reminders for payment.

Lesson #3: Managing credit cards wisely

As they’re away from home for the first time and suddenly responsible for handling all of their own expenses, students often don’t realize how small purchases can add up quickly. Because of this, too many end up strapped for cash, particularly when it comes to using credit cards. During the first few weeks of school, it’s common for credit cards lenders to set up shop in the hallways so that getting a card is so easy – students can sign up for one between classes.

When used wisely, credit cards can be beneficial, especially in emergencies. But if they’ve never had one before, students may not realize the added costs – i.e. 18 to 19 per cent interest charges – if the outstanding balance isn’t paid in full by the due date.

Warn your child beforehand to look past the temptations of welcome offers such as a free T-shirt or a chance to win a trip, and instead encourage them to compare features such as interest rates and fees. Tardy payments can stain a credit rating, which is very hard to remedy, even many years down the road when it comes time to purchase a car or apply for a mortgage.

Special offer: A great option for students is the Tangerine Money-Back credit card. The card earns cash-back on just about anything – choose from categories like restaurants, groceries, entertainment, gas, public transit and more! Apply for the Tangerine Money-Back credit card through RateSupermarket.ca and you’ll receive $50 in cash via Interac e-Transfer or an e-gift card when your application is approved. That’s free school supplies… or a few pizzas. Offer available until August 31, 2018.

Pro tip: Don’t pay twice for health insurance!

As part of registration, students can expect to be automatically enrolled in a school-run health and dental insurance plan, similar to plans offered to working employees. This generally covers supplemental health procedures, out-of-country travel insurance, and most routine dental work. Usually enrollment is mandatory but if they’re covered by your existing plan, you can get your money back. You must opt-out by a certain date, however – generally a few weeks after school starts. If you’re unsure of the opt-out date, you child should be able to confirm with admin.

University and college can be a very stressful yet exciting step in your parent-child relationship. Start off with the right financial footing, and you’ll prepare your children for bigger money milestones down the road.

This post has been updated.

Related Topics

Banking 101 / Credit Cards / Insurance / Lifestyle / Lifestyle News / Personal Finance / RSM News / Using Your Credit Card / Your Budget

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