The Money Talk for College Students

The Money Talk for College Students

If you have students heading off to college, then you need to have a money discussion before they leave. The three big items you need to discuss are:

  1. Credit cards
  2. Budgets
  3. Banking

Why did I choose this particular order? It seems backwards in many ways… and it is. But let’s look at it from your college-age child’s perspective.

  1. Credit cards are everywhere
  2. They have commercials all over the olympics and sports programs and elsewhere
  3. Everybody advertises that they accept credit cards
  4. People are shopping online all the time
  5. Credit cards are one of the main ways to build a good credit score (which they will need)

Credit Cards

Now that we have established why credit cards should be discussed first, let’s talk. Every college student should have access to a credit card. But first, they need to understand the rules of credit cards, how to use them properly and how they are often misused. once a student understands how credit cards work, they should have one.

One of the best ways to help your student is to make them an authorized user on your account. They can build their credit on your good name, you control the credit limit, and you have access to the monthly statements to see where and how they are spending their money. It is a win-win.

If your child is spending too much or on the wrong things, you can rein them in within one month – or sooner as you monitor spending online. This allows them a level of freedom with guard rails.

Eventually they can get their own credit card, but it is a good idea to start them out by learning on yours. Think of it like training wheels. Then you move to holding onto the bike without training wheels. And eventually they will learn to ride on their own.

Discuss your expectations. Let them know you can monitor their every purchase. Explain the consequences of spending too much or on the wrong things. And give them a budget of how much they can spend.

Book - Extra Credit


It is critical that you set the right expectations about how much money your student is to spend. Of course, if they work during the semester they can spend that money, but how much of your money can they spend? This is also important as you look at their financial aid package, especially if they are borrowing money. You don’t want them to borrow any more than they have to and no more than they can handle paying back once they graduate.

A budget is very simple. Make a list of all the items they will need their first year including:

  • * tuition
  • * room and board
  • * books
  • * other class supplies
  • * food off campus
  • * clothes
  • * sports gear
  • * transportation costs
  • * fraternity/sorority fees
  • * other club fees
  • * whatever else your child needs

Now, estimate their costs, add a 20% cushion and figure an additional amount for miscellaneous. Compare this amount to what they expect to earn in their part-time work and what they are receiving through financial aid. See if there are any gaps and how much of that gap you are willing to cover with your money. You can allow them to use your available credit as one way to get money to them, or you can set up a bank account for access to cash.


Many parents are concerned about how they will get money to their student. The easiest way is to choose a bank that has a branch on or very near the college campus. Make sure your student has a debit card to access the account. You will need to be able to easily and inexpensively (free is best) transfer money into that account.

For example, say you have an account with ABC Bank. Set up an account for your student from ABC Bank also. Then, deposit a certain amount in the account each month. Your student can either withdraw the cash or use the debit card for purchases. When they are low and you want to give them more money, or it is the beginning of the next month, just transfer money from your account at ABC to their account.

The key is that you don’t want them to have access to all of your cash nor do you want them to have access to too much at one time.

Another alternative is a pre-paid debit card, such as Bluebird or the Wal-Mart Money Card, both of which are available through Wal-Mart. You can load money on the card from anywhere via your computer so they operate very similar to a checking account and have very low setup fees and no monthly fees. You want to avoid any that have maintenance or monthly fees if possible. There is no reason to lose money just to give your student access to cash.

Book - The Parent's Guide to College

Final Thoughts

It really does come down to communication. Talk openly with your child about your expectations of them, and what assistance they can expect of you. Make sure it is two-way communication so they don’t just tune you out. You want as few misunderstandings as possible and you want to make sure they are learning the right money habits, not the bad ones.

Check out our section for college parents!

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The three authors, Bill Pratt, Mark C. Weitzel, and Len Rhodes, are industry leaders in personal financial education. Together, they have a combined 75 years of experience in banking, economics, and entrepreneurship. Now, they teach thousands of students personal finance concepts and decision making skills, author textbooks and public press books on personal finance, and help schools develop innovative personal finance literacy programs. Recently, they were instrumental in developing a personal financial management certification program for leaders in higher education. The other books in The Money Professor series include The Graduate’s Guide to Life and Money and Extra Credit: The 7 Things Every College Student Needs to Know about Credit, Debt & Ca$h. Their books, lectures, and programs give students, parents, and educators the tools and knowledge to make good financial decisions all their lives.

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