William Penn Life, 2004 (39. évfolyam, 1-12. szám)
2004-05-01 / 5. szám
MoneywiSe College-bound teens need a crash course in money management Many parents are frightened by the prospect of their college-bound teens applying for their own credit cards and managing their own bank accounts. And, they have reason to be. "Many teens get an F when it comes to money management," says Charles Brown, former president and CEO of the National Foundation for Credit Counseling (NFCC). Studies show that almost half of credit card carrying college students have been assessed a late fee, and seven percent have had a credit card cancelled because of late fees. They're not much better with checkbooks because about half have bounced a check. Brown said parents can help their young scholars avoid these types of money management problems by taking the time to explain the basics of budgeting and finance. By investing a few hours of time, parents can save their children hundreds of dollars in interest payments, late penalties, and return check fees. If you are sending a son or daughter off to college for the first time this fall, now is the time to discuss money management and here are some points from NFCC you may want to cover. NFCC is the nation's oldest and largest nonprofit organization providing education and counseling services on budgeting and credit. Emphasize fiscal responsibility. Show teens the importance of keeping close tabs on how much money they have, what they need to use it for, and how long their money has to last. To do this, they will need to keep their checkbook ledgers up to date and be sure to include all ATM withdrawals. Their money management goals should be to pay with cash and avoid purchases they can't afford. Develop a first semester budget. Help your teen set monthly spending targets. Without a personal budget, he or she is liable to run through money quickly. His or her personal budget should include meals out, clothes, gasoline and other living expenses. Explain the cost of credit. Many students treat credit cards as free money. Credit is anything but free. Once the grace period is up, students are assessed interest. For example, students who charge $1,000 on a credit card with an annual percentage rate of 17 percent and make a minimum payment of $25 or 2.5 percent, will pay $959 in interest over a 12-year period. Caution against peer group pressure. A student with a credit card is a popular person; however when the bills come in, many of those fairweather friends will be long gone. Make sure your collegian knows that he or she is ultimately responsible for the charges and that friendships can't be bought. Encourage thriftiness. Make sure teens know that, if they're not careful, their hard-earned, summer work money will disappear. Snacks, convenience store sodas and other incidentals can drain a checking account in short order. Eating out when you have a prepaid dorm meal ticket can also shrink a checking account. 4 Williu Pen Life, May 2004
