How to Teach College Students About Financial Responsibility - Guest post

When it comes to financial matters, twelve years of primary education and four years of college do little to prepare students for the real world. In most schools, math classes focus on algebra and geometry instead of interest rates and budgets. That means it’s up to you to teach your kids about financial responsibility. When I graduated from high school, I had nothing but a checking account and the promise of scholarship money. I learned these four financial lessons the hard way, but your kid doesn’t have to.

1) The Importance of a Credit Score

When I was younger, it was hard for me to understand why bad credit is considered better than no credit. Eventually, a helpful loan officer explained it this way: your credit score represents the likelihood that you’ll pay back a loan. If you have a bad credit score, the lender can still review your history and make an informed decision. If you don’t have a credit score, the lender has no idea how to evaluate you.

If you want to help your teen build and understand credit, consider adding them as an authorized user or helping them get a secured credit card.

2) The Value of a Vehicle

I inherited my mom’s old Buick at the age of 16, and it served me well until my junior year of college. When it finally died, I was 20 years old and making $7.50 an hour. I had no idea how to fix it, so I bought a used Volkswagon Bug from a shifty dealership. Two weeks later, the car started shooting flames from the radio. Save your child from similar mechanical difficulties with these tips:

• Schedule routine maintenance and seasonal maintenance for your vehicle. This will prevent a costly repair or replacement.
• Consider leasing, buying, and public transportation when evaluating new transportation options.
• Value efficiency over brand name. A Volkswagon Bug won’t serve a college student as well as a 4-door sedan.
• When buying, focus on important features like a collision warning system, electronic stability control, lane-keep assist, or handsfree bluetooth.
• Shop around for car insurance. Don’t settle on your first quote.

While it’s difficult to purchase a car in college, it is possible. Before you purchase a new or used car, read up on tips for purchasing a vehicle in college.

3) The Essentials of Budgeting

Budgeting was also a significant challenge during my college years. Between school books, car maintenance, and a mean latte addiction, I found myself “broke” at least twice a month. Teach your child to budget for these essentials before they spend their money on expenses:

• Debt payments
• School expenses (tuition and books)
• Rent and utilities (electricity, gas etc.)
• Transportation (gas, auto maintenance, etc.)
• Communication (internet, phone bill, etc.)
• Medical expenses (prescriptions, co-pays)
• Food and household goods (groceries, cleaning products, etc.)
• Pet expenses (food, vet, etc.)

After these essentials are locked down, calculate the subtotal and subtract it from your teen’s total income. With the remaining funds, make a budget for these flexible expenses:

• Personal expenses (haircuts, clothing, toiletries etc.)
• Eating out (Starbucks, fast food, sul-service restaurants etc.)
• Entertainment (movies, eating out, drinks, etc.)
• Savings (emergency fund, deposit for larger

The key to a good budget is realism. If you create an impossibly strict budget, it will encourage overspending. If you need additional help in this area, check out this digital budgeting tool.

4) The Importance of Saving

I never saved my money in high school. I squandered my graduation money on a summer road trip and never looked back. Now that I’m in my late twenties, I have very little in my emergency fund and even less saved for retirement. I’m starting to change that, but I wish I had started sooner. That said, you can save your child from wanton spending with these tips:

• Teach your child to keep a 6-month emergency fund for unexpected expenses
• Visit with a financial planner to learn about an independent retirement account
• Teach your child to look for jobs that offer a 401(k)

While this guide is by no means complete, it will give you a way to start discussing financial responsibility with your child. Above all, I encourage you to be honest. Discuss your own struggles with money and describe the repercussions. This will help to transform “financial responsibility” from a vague concept to a set of daily choices.



Jason Goetz is an aspiring writer who graduated from Arizona State University with degrees in communications & media studies. He enjoys hiking & world travel in his free time. If you have any other questions, email him: jaysongoetzz@gmail.com.