College Perils: sex, drugs and . . . credit cards? You be the judge

LSU Ag Center News Release

LSU AgCenter News
July 19, 2007 at 9:42 am  | Mobile Reader | Pring this storyPrint 

As you prep your college-bound kids for all the perils in life, donít forget money management, advises LSU AgCenter family economist Dr. Jeanette Tucker.

As your young adults pack for college, the last thing you, as a parent, may be worrying about is whether they can balance a checkbook.

Yet, for many students, the combination of leaving the nest, managing oneís own money, making new friends and living an exciting social life is a formula for financial disaster.

"Donít assume that your child learned about money in high school," Tucker said, noting that a recent survey by the Jump$tart Coalition for Personal Financial Literacy, revealed that only 15 percent of high school seniors reported receiving some sort of personal finance education in high school. On average, the students surveyed received a score of 52.4 percent on finance-related questions. Louisiana students fared even worse, answering, on average 47.2 percent, correctly. Hardly a passing score!

"Donít panic! This is not the time to confuse your student by rushing into explanations of complicated financial procedures," Tucker said. "It is more important to make certain he or she understands the basics of how to stick to a budget, pay bills on time, handle credit responsibly and balance a checkbook."

College can be a real wakeup call for teens accustomed to obtaining money on an as-needed basis from their parents. So, help your student devise a budget before he or she leaves home. Total the amount of money, if any, that your child will receive each month from you, earnings from work or other sources such as scholarships and savings. Then list the expenses he or she will be responsible for each month and determine the best way to make that income cover financial obligations. Help the student make certain the budget is realistic and manageable.

If students need to open a new bank account, involve them in searching for the best type of account for the balance they will be keeping. Shopping for an account also can help them understand the costs associated with bounced checks, ATM fees and other financial services.

Make certain your child can track transactions to manage the cash flow. The convenience of debit cards and ATM machines often overshadows the importance of tracking expenses and balancing their check register.

According to the Nellie Mae student loan center, the average credit card balance for undergraduate students is $2,169, and many schools are reporting they lose more students to credit card debt than to academic failure.

"Your best defense may be to see that your child has a credit card before he leaves for school," Tucker said, explaining, "By being involved in the process, you can help him or her select an appropriate card with a reasonable credit limit."

Receiving a monthly statement and seeing how fast charges add up may be as valuable an educational experience as freshman math.

Be sure to talk to your child about when it is and is not appropriate to use a credit card. Explain there is a difference between charging for car repairs and a frozen cappuccino. Also discuss the repercussions of not paying bills in full each month. Discovering that $1,000 in credit card debt at 18 percent will cost $465 and take more than 6 years to pay, if only 4 percent minimum payments are made each month, can be a real shock.

Lastly, Tucker says to discuss the importance of paying bills on time each month. Overdue payments not only face late-payment fees they can cause serious damage to credit reports, often making it tough to rent an apartment, buy a new car or even get a job after graduation.

For related information on family finances and consumer topics, click on the Family and Home link on the LSU AgCenter homepage, at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.




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