Investor column | How to financially prepare your child for college
If your child is planning to attend college soon, your college prep “to do” list is likely quite long. I’m about to make it longer! Here is also what you need to do to get them “financially” ready for their next educational experience:
Set a budget
Often easier said than done, it may begin with lots of estimates. Consider starting with a school meal plan: at least they will have access to nutritious food and that part of the budget will be accounted for. Review other likely expenses (Supplies, Transportation, etc) and allocate a dollar amount to each. Have them download a budget app for their phone and remind them to log expenses regularly.
(https://www.nerdwallet.com/article/finance/best-budget-apps)
Review results with them & make adjustments as needed.
Make banking arrangements
Consider opening a joint checking account so you both have access. Choose a local bank with branches on campus, or at least strong online access. Make sure they understand depositing and withdrawing money, bill-paying, and keeping track of debit card expenditures. They should learn about how to protect their accounts, check their statements, balance their checkbooks, etc before they go to school.
Emphasize prompt payments
Let your kids know how important it is to pay bills on time. Missed payments can cause problems with their credit rating, in addition to late fees.
Consider a credit card
Eventually, building good credit is a must: It will help the student qualify for loans, auto insurance, rental applications, etc. Unless the parent is 100% sure they’re responsible, the first regular credit card a student should have is the parent’s credit card. The teen can be an authorized user on the parent’s account with a separate spending limit. If the child is responsible, he could try applying for one credit card with a low balance limit (say $300) in his own name. If this card balance is paid off regularly, this will help to build a positive credit history for your child.
Educate your child to ignore all those special credit card offers he or she may get in the mail. There is no need at this stage to have multiple credit cards. The only one they should have is one that you control together!
Back up their financial information
Have your child make photocopies of the contents of their wallet and keep a copy with you at home. If you think they can keep this information secure, they should also take a copy with them to school. For each important “card” being copied, write down the phone numbers or websites of the places to contact if that card is lost or stolen right above the copy of the card. That way, you have a quick way to get replacements, if need be.
Consider their healthcare
When your kid gets sick at school, you won’t be there to nurse her back to health. That means she needs to know when to call the health center, where it is, and how it works. Sit down with your teen and visit the center’s website.
Look into health insurance early. First determine what’s available and covered on campus—college and university health centers vary in the scope of the medical problems they treat. (The information should be in your student’s orientation packet; if it isn’t, contact the admissions office.)
If your teen doesn’t already schedule doctor’s appointments or fill prescriptions on their own, have them make appointments & fill prescriptions before they go off to school and remind them to always carry an insurance card.
Prepare for emergencies
Students should have important numbers, like the campus police, the health center, and any trusted adults who live nearby, in their cell phone. Stock your teen with a simple first aid kit - for not-so-serious illnesses and scrapes.
Most importantly (and you already know this), if your child has already turned 18, they are considered a legal adult for medical purposes. Make sure you have them sign HIPPA authorization forms allowing you to speak with their doctors at home and any health care provider in their college town should there be a need.
Consult your attorney
If your child is over 18, visit your estate planning attorney. They should have power of attorney documents and healthcare directives (health care power of attorney, living will) executed and on file with you before they go off to college, just in case you need to step in and act on their behalf if needed.
These are all significant steps on their road to financial independence someday. If you need help getting organized around these issues, be sure to consult a CERTIFIED FINANCIAL PLANNERTM practitioner for further guidance.
-
Karin Grablin is with SRQ Wealth, One North Tuttle Avenue, Sarasota 34237, 941-556-9004. www.srqwealth.com. Securities offered through Cetera Advisor Networks LLC, a Broker Dealer, Member FINRA/SIPC. Investment advisory services offered through CWM LLC, an SEC Registered Investment Advisor. Cetera is under separate ownership from any other named entity. This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks, LLC nor any of its representatives may give legal or tax advice.