(StatePoint) Unfortunately, one of the most expensive times in one’s life, is when he or she tend to be the least financially savvy — college. But good money management during those years is the best way to keep a college career on path. Parents and guardians can help their children become more financially savvy.
Here are a few ways college-age kids and their families can make sustainable financial health resolutions in the New Year.
• As tuition costs continue to rise, it’s more important than ever to understand your college funding options. Completing the FAFSA (Free Application for Federal Student Aid) form is the first step toward obtaining financial aid. Completing and sending your FAFSA form as soon after January 1 of each year as possible can increase your chances of receiving the maximum amount of financial aid you qualify for. Also, explore private loans through banks and private lenders with competitive rates that don’t require payments while you’re still in school.
• Manage debt: Paying student loans on time is important. Avoid late fees and mounting interest by sticking to your repayment schedule. Even though some loan payments are deferred until college is over, the earlier you can proactively plan for this the better.
Generally, if you aim to keep your loan payment to no more than 10-15 percent of your anticipated post-college income, you should be able to maintain a realistic repayment timeline, according to Wells Fargo, which provides discounts such as automatic payment enrollment and relationship discounts for students or cosigners who already have a student loan or qualifying consumer checking account with Wells Fargo.
• Establish a budget. Whether your child is working and making their own spending money, or living on an allowance you provide, help them take better control of that money so they don’t create unplanned debt later on. Online tools, such as Wells Fargo’s Cash Flow Worksheet, can help students document what they are spending. If there are extra funds at the end of the month, parents can encourage students to boost savings to cover future college expenses, spring break vacation with friends, and life after school.
• Good credit is a must-have for most major life purchases. Students can start to build a credit foundation while still in school. Consider a card with a low-introductory rate that offers cash back on gas, grocery, and drug store credit purchases to free up more money for other necessities like textbooks and emergency situations. Encourage your student to actively monitor the account by signing up for mobile banking alerts.
More resources for smart money management for college students and their families are available at blogs.WellsFargo.com/StudentLoanDown/.
A higher education and a financial education can go hand in hand. Help your child make smart financial decisions amidst the newfound freedom of college life.