 | Mark Kolarik is the President of the Kansas Teachers Community Credit Union, located in Pittsburg, KS, since 10-2002 and is a board member of the Kansas Corporate Credit Union located in Wichita, KS . He has been employed in the financial service industry for the last 31 years, having worked in several credit unions for 21years and 10 years in the banking industry. He holds a Bachelor of Business Administration degree from the University of Wisconsin-LaCrosse and is a Certificated Credit Union Executive. |
Banking & Finance
2011-12-27 13:53:11
College students and credit
Q: We have a son that will be attending college next fall. As parents, what should we do to educate him on money management.
A: College is a critical time to teach young adults budgeting and money management.
Statistics show having a good understanding of financial skills is critical for college-bound students:
•College students have the second-highest personal bankruptcy rate in the U.S., and student loan defaults are on the rise. (EDSA Group)
•Half of college undergraduates had four or more credit cards in 2008. (creditcards.com)
•In 2011, the average college student graduated with a debt of $22,900. (Wall Street Journal blog)
Here are a few tips in helping parents teach soon-to-be college students critical lessons in money management.
Guide them in establishing a credit card account.
Using a credit card wisely is a good way to build a credit history, but stress that all credit cards are not the same. Encourage them to carefully scrutinize any credit card offers they receive. Consider applying for a joint credit card with your student – that way, you can monitor the spending activity and step in if things start to get out of hand.
Stress the importance of protecting their personal information.
Identity theft is on the rise, so teach them common-sense monitoring: review statements each month and report suspicious charges, protect all passwords and PINs and never share them with others. Shred receipts or papers containing personal or financial information, including pre-approved credit card offers and don’t mail checks from home mailboxes or apartment mail drops – use post-office locations when possible. If you pay bills online, only send payments over secured networks.
Teach organization and budgeting skills.
Make sure they stay on top of due dates for their bills. Have them keep receipts and balance their accounts regularly. Help them understand that late or missed payments, along with bounced checks or overdrawn balances, can damage their credit history and make it difficult to get a loan for their first car or home.
Stand your ground.
Establish ground rules about how much financial assistance you will provide before they leave home – and stick to it. If they need extra help once in a while, that’s fine, but don’t make it a habit. They need to learn on their own.
Many local credit unions or banks offer special accounts, credit cards and saving programs designed especially for college students. Contact them to learn more.
