Recently I read an article about the level of debt college students have at the time they graduate. No, I am not talking about student loans. Those are overwhelming enough. I am talking about credit card debt. One study found that the average college student has 4 to 6 credit cards. The combined balances on those cards averaged between $3,000-7,000. Can you imagine beginning a new career with that much financial burden? It is a formula for disaster.
I remember, in what seems like the not-so-distant past, our 17-year-old college freshmen whispering through the phone that no one on her floor had a clue of how to balance a checkbook and they were bouncing checks all over the place. Today, you’d replace “balancing a checkbook” with “responsibly handling a credit card” but in either case, it is a reminder that when students enter the halls of higher education, they do not have instant financial savvy. But it can be learned. Wise parents give their student some financial responsibility while they are still under their wing. Before leaving the parental home:
- Try designating bills they have to pay with their own earned money or an allowance.
- Talk to them about the use of credit and more importantly the consequences of misuses of credit and what it can mean when trying to purchase a car or qualify for a mortgage.
- Start with a loaded credit card, they are a great way for students to experiment. Its easy to see how quickly pizza and incidentals can add up over time. When the card is empty, it can be a long month.
- Let them make small mistakes under your guidance and let them work their way out.
Keep in mind you taught them to skate, you taught them to ride a bike and to drive a car. Managing money should get the same attention.