Discussing Financial Literacy with your College Student

By Nicole Young on May 11, 2023

As parents prepare to send their kids off to college for the first time, there are many excitements and worries that come with the transition. While you may have spent years saving for college tuition in a 529 Plan, there are other financial considerations that rarely get attention. Among these are teaching your college student how to spend wisely. According to the College Board, Midwest college students spend between $18,767 and $28,016 on living expenses annually.

Each family’s circumstance is different – some students rely on financial aid or part-time employment to cover living expenses. Other parents may plan to cover all costs associated with college. Either way, it’s important to sit down and think about how their newfound independence can impact their financial savviness.

Consider discussing the following:

Do you expect your student to get a job on campus, or work during the summers?
What expenses are considered “necessary” and what are considered a “want”?
How much is reasonable to spend on social obligations, eating out, and entertainment each month?
Will your student be opening or using their own credit card? While college can be a great time to begin building credit, having a conversation about how credit works is crucial. Make sure your student understands the difference between “good debt” (school loans) and “bad debt” (unpaid credit card balances).
What level of emergency fund should your student preserve throughout the school year?
If your student is bringing a vehicle to school, who is responsible for maintenance and repair costs?
If your student is taking loans, be clear about how repayment works. Comparing expected payments against future incomes can be a meaningful way to begin this conversation.
If your student is earning income, they are eligible to open a Roth IRA and can begin saving for retirement. While rarely a top priority during college years, it can be an impactful way to allocate extra savings.
Set up regular check-ins to see if your student is on track and adjust your plan if necessary.

Regardless of how expenses are covered, it is important for parents to help their students plan and emphasize the long-term importance of financial literacy. Having awareness about personal finance can give your student a skill set far more advanced than their peers.

Looking for more resources to guide you through this transition? E-mail us at CMangan@myprivatevista.com.

Article by: Carrie Mangan, MSF, Private Vista Advisor

SOURCE: https://professionals.collegeboard.org/higher-ed/financial-aid/living-expense/2020/12-month

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Private Vista, LLC is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

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