Money Conscious Student Talk

Talking to Your Student About College Costs

You may wonder how the last 18 years flew by like a zephyr in the sky. In contrast, the next 18 could dredge like the Riverboat Queen if your soon-to-be college student gets mired in more debt than The Donald unloaded on banks and investors. What do I mean by this?

Even if you’re not the helicopter parent you openly mock, children still live in a protective bubble until they’re dropped off at their new home, likely a brick dormitory on a well-manicured campus. The minute you no longer see them waving (or dancing) from your cracked rearview, they and their money consciousness (often to your wallets detriment) are all on their own. It’s at this point, that many students get themselves started on a financial path to ruin. While neither of our stories of debt started in college, we know several people who had champagne tastes with beer budgets. In those years, it should’ve been PBR rather than Dom P.

As our friend Debbi King said in our Google+ HOA hosted by Experian, “You’re not raising a child. You’re raising an adult.” How do you prepare your pending adult to be fiscally responsible while no longer under your purview? You have a money conscious talk or talks. Such talks can save your student from a lifetime of financial mistakes and misery. Here are four topics to cover and how to approach them before you embrace your empty nest.

Buy Your Own Frisbee

I don’t know about you, but my experience was the bank tables promoted credit cards were on our “dry” campus as much as beer. Bank booths sat outside our bookstore so much they should’ve subsidized text books. Of course, they didn’t. They did, however, promote credit card usage and “small” monthly payments to buy books that depreciate in valued 80% in four months.

At Phroogal’s Road to Financial Wellness Stop 19 in Denver earlier this summer, Jason Vitug talked about how he was duped into signing up for a credit card in order to get a “free” frisbee. This ended up being the most expensive frisbee in history.

While neither David nor I had such problems, students are often drawn to these booths like song writers to the moth/flame analogy. Let your student know that the people working these booths are looking for easy sales and poor college students are often easy prey. While credit cards may make them temporarily feel rich, they’ll eventually have to pay the piper. Tell them to avoid these booths and their promotions. If they need a t-shirt or frisbee bad enough, lend them $20.

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Credit Cards Are Not Your Friends

Credit cards can make you feel richer than you are and this feels good. Studies have shown that dopamine levels increase in some people when they buy things and even when they simply get out their credit card. This is similar to the response of seeing a good friend or loved one.

The problem is that credit cards are not your friends. That good vibe that your student may feel by using a credit card will be more disastrous to their career than failing underwater basket weaving. More and more employers are reviewing credit scores and history as part of their hiring practices. Not only could debt put your student on a path to financial ruin even before they get their first paycheck, they may have to accept getting their first paycheck by flipping burgers. While flipping burgers is a noble profession, it’s not worth $100,000 in student loan debt plus credit card debt.

Cash Is King

No news here. We and countless others have advocated for the increased usage of cash. Especially when your biggest concern is how many ping pong balls you can get into a plastic cup, pretending to be a responsible credit card user isn’t a good thing. While cash can be lost in a pocket filled with a phone, wallet, keys, lip balm, tissues and ID, only pocketing the cash your student plans to use that day/night will mitigate that risk.

If your student commits to cash, they’ll avoid paying 20 percent over every purchase they make. They’ll also learn to value cash and, maybe, master the art of money chunking, as they’ll have to spread their money over a semester rather than just two weeks. Let them know this is a life-long skill that will yield amazing dividends.

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Be Cheap; It Gets Better

Finally, let your student know that saying no now can yield riches later. By adopting a frugal lifestyle today, they’ll condition themselves to respect the inflow of money when they’re a high-powered corporate attorney. Also, four or five years is not that long. Embracing the futon-lifestyle now will make their pending G6-lifestyle even more rad. Let them know that the less debt they have upon graduation, the more they’ll have after graduation. While it may feel like an exercise in poverty, they’ll one day look back on it as a great time.

Ultimately, have the talk. In fact, you can’t have the talk too much. Get the whole family involved. If one of your students has to hear the message multiple times, maybe it’ll sink into their man bun covered head. If you need more helping prepping for that talk or know your student won’t listen to you, download a free copy of #MoneyConscious Student at the image below.

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