FAYETTEVILLE, Ark. (KNWA) — A recent study shows that parents of college aged children aren’t always in the know when it comes to their kid’s finances.
According to the survey, over a third of the students polled said they had unexpected debt in their first year of college, but the majority of the parents rated themselves very confident in their children’s ability to manage money while in college.
“You are taking on new responsibilities, you’re life is changing,” Credit Counseling of Arkansas (CCOA) Director of Community Relations and Housing Counseling Joel Doelger said. “You are trying to adapt to new income and new expenses that you are not used to before.”
Doelger said the problems that college students face, are problems young people face for eternity, and go beyond just the first year at school.
He said these problems include not setting out clear financial goals, not knowing the importance of good credit, and not looking at the bigger picture when they spent.
“It’s hard to put that money aside, and instead you tell yourself I’ll see if there is money left over at the end of the month,” he said. “But (unfortunately) there is never any money left at the end of the month, it all gets spent.”
Addison Lobaugh, a sophomore at the University of Arkansas, said she learned a lot about the value of money her freshmen year.
“I have definitely had to go to my parents before and say look I messed up” she said.
Lobaugh said now she practices managing her money better by only trying to use 50% of the money she gets for food and fun.
“I take half of it each week and I save it,” she said.
The survey also reported one in three students reported hiding their debt from their parents.
Lobaugh said she was surprised to hear the report of so many college students are in debt, but she was even more surprised to know they don’t tell their parents when they are.
“If you ever are in a bind, I know it is an uncomfortable conversation to have but like talk to your parents,” she said. “That is why they are here, they are here to help you grow and learn.”
Doelger said he wasn’t surprised but thinks it is important for college students to have these conversations with their parents.
“It’s a good idea to have open conversations about this because there is a good chance your parents have also struggled with this,” he said.
Below is a list of five tips to avoid the “Financial Freshman Fifteen” according to Quicken:
- Avoid the free t-shirt. While college students are often wooed by credit card companies with the allure of swag and other perks, signing up for credit cards can be a slippery slope. While you help your inbound student pack, make sure you’ve covered the basics about credit.
- Be careful with recurring fees. It can be tempting to get that free month of streaming music or premium TV just for signing up. But forgetting to cancel can lead to unexpected charges hitting your bank account on a monthly basis.
- Plan for expenses. Managing day-to-day expenses is just the beginning — preparing for, and setting aside money for, big twice-yearly expenses like books and class fees is critical. This college budget template will help students plan ahead.
- Take advantage of student perks. Everything from flexible college meal plans to discounts on local stores, movie theaters, and software are available to college students who take the time to do their research.
- Keep a budget and check it regularly. Creating lifelong habits around financial management starts now — parents might consider a money management tool like Quicken as a great graduation gift for high school seniors.