If you have children or grandchildren heading to college, you can set them up for success by helping them avoid these costly money mistakes.
Mistake 1: Getting caught in the credit card trap
Credit cards can be a great way to build a credit history – if they’re paid off each month. Help your student understand when and how the card should be used, or those late night snack charges could easily pile up into massive debt.
Mistake 2: Using student loans for nonessential expenses
A lot of students are tempted to stretch their loans to cover new car purchases, clothing budgets and other non-school-related expenses. Considering the interest rates charged on these loans, there are likely more affordable options for paying these everyday expenses.
Mistake 3: Relying solely on parents for financial support
It’s great to have Mom and Dad as a safety net, but by the time students reach college age, they need to start figuring out how to manage monthly expenses. Help your student set up a monthly budget and learn how to live within it.
Mistake 4: Overestimating post-graduation earnings
Students often have the misperception that the moment they’re handed their diplomas, they’ll immediately start earning as much as their parents do. It’s important to remind your student that most people start at the bottom, and budgeting for a smaller starting salary might be more realistic.