When kids go off to college, there are a lot of things for parents to be worried about. Today an accumulation of debt should be on top of that list. With credit card peddlers parked on nearly all college campus in the United States, offering free t-shirts (and other trinkets) to anyone who will simply fill out a credit card application, there are valid reasons to worry. Student debt has become a major concern. Financial choices made even at this age can have major repercussions. If students have bad credit by the time they graduate, they already put themselves at a major disadvantage. It will be harder to get hired because more and more companies are running credit checks. There will also be increased difficulties renting an apartment and/or buying a house.
As a parent, it will be your job to inform your student of the potential dangers that are lurking when a person misuses credit. Obviously, you cannot force them to listen to and once they turn 18 and hit campus, they are technically adults. Therefore, you may have to do the majority of your teaching before they leave the house. Below, we will take a look at some ways to help your student stay out of serious debt before he or she heads off to college.
Student often accumulate debt
Help Them Understand the Value of Money: Avoid giving your child everything he or she wants. Instead, give them the chance to earn it. Paying them for chores and good grades and then requiring them to save up for what they want will give them a chance to see the amount of effort that must go into earning money and how much work it might take to get themselves out of debt.
Be Your Child’s First “Credit Card Provider”: If there is a big ticket item (within reason of course) that your child wants, let him or her borrow the money with interest. If they fail to make the monthly payments, take away certain privileges. This will give them a taste of what it would be like to own a credit card, except that they won’t run the risk of actually ruining their credit. It is a safe way for them to learn but still allows them to feel like to owe someone money.
Help Them Sign Up for a Student Prepaid Credit Card: A student prepaid credit card means that students won’t ever have to worry about spending more than they can afford to because their purchases will be limited to the amount of money that they put on the card. When they run out, they will no longer be able to use it. This is a safeguard at its best.
Relax: Once you have taught your children the financial basics, it is up to them to either use what they have learned or to ignore it. They are adults at this point and it is up to them to make good decisions. If they fail to, they will suffer the consequences. Even though you love your children and never want to see them harm themselves or put their future in danger, you may have to administer some tough love and let them dig themselves out of whatever financial problems they get into due to their irresponsibly.
Many parents skip talking to their teens or young adults about money. Somehow, they believe that they will just get it. Well, millions of college students are not just getting it. More and more of them are leaving college with a substantial amount of debt. Coupled with student debt, individuals in their early 20’s are already on their way to financial disaster. Therefore, it is more important then ever for parents to sit down and work with teenagers, to teach them how to handle money before they become college students. Once they are out of the house, it is much more difficult to talk to them and share important lessons. At this point in their lives, they will likely not want to hear from mom or dad anymore anyway, unless they find themselves in trouble. Therefore, when you have the most control over them (while they are under your roof), it is important to give them the tools they need to successfully avoid debt or at least deal with it in a responsible manner.
