As a college student, there are a lot of things that I’ve managed to learn pretty quickly — like how to do laundry without ruining my whites. But there are some things that I wish my parents had taught my before I went to college, particularly when it comes to finances. Read on to learn what you can do differently when your kids head off to school.

5. How to Use a Credit Card

This one seems like a no brainer, right? Using a credit card is a simple as swiping/inserting or entering in your info onto a website, and that’s it…except that it isn’t. When the bill arrives, you may find yourself wishing — as I did — that your parents had taught you a bit more about how credit cards work.

Unfortunately, although rules about giving credit cards to college students have tightened up in recent years, they are way too easy to get — and to use. When you charge something, you have until the following month to pay off the balance. if you fail to pay it off, then you’ll be charged a fairly high interest rate on the remaining amount — and then if you don’t pay off your balance the next month, you’ll be charged interest on top of that interest. This is known as compounding interest, and it’s a sure-fire way to rack up a huge amount of debt in a short period of time. In addition, if you are late on a credit card payment, you will pay a large fee for that late payment — further increasing your debt.

Before I left for college, I wish that my parents had talked to me about how to use credit cards responsibly. Namely, that I shouldn’t buy anything with a credit card that I couldn’t afford to pay for in cash — and that I should pay off the balance in full each month.

4. How Student Loans Work

Like most students, I am paying for my college degree through student loans. With the high cost of obtaining a college education, my savings, scholarships, grants and work study opportunities were not enough to cover the cost of my tuition, fees, room and board — which is why I decided to take out both federal student debt and private student debt. But before I signed those loans, I wish my parents had talked to me about loans, and what exactly it meant to take on that amount of debt at such a young age.

There are two types of student loans — federal and private. Federal student loans are offered through the government, and tend to have more favorable terms. Private student loans are offered through banks and other private lenders, and usually require a cosigner. The loans have different interest rates and terms, and options for repayment that I didn’t fully understand when I agreed to them.   I have taken on substantial student loans in order to pay for my education — and before I had done that, I wish that I knew more about these loans and what it would mean for my future to have so much debt.

3. How to Budget

When I left home, I thought I knew everything there was to know about getting along in the world and living independently — but it turns out that there may have been a few lessons that I missed. Budgeting is one big area that my parents didn’t talk to me about, which has made it challenging for me to figure out how to live within my means as a college student.

Figuring out how much money I have coming in each money and how much money I spend has been the key to making sure that I am not racking up any more debt than necessary while I finish my degree. If my parents had taught me how to budget before I left for college, this task would have been considerably easier. Many parents think that they are protecting their kids by shielding them from their financial situation — but letting us know more about how the household is run will help us make smarter financial choices when we are living on our own. That way, we are less likely to make bad decisions and run out of money when we are away at college — and more likely to save for a rainy day.

2. That My Dream School Isn’t Necessarily The Right School

When it came time to choose a college, I had my heart set on one particular (very expensive) school. My parents briefly talked about the cost, but ultimately told me that it was my choice and that they supported whatever decision that I made. Several years into my degree program and facing years of heavy student loan debt, I wish my parents had talked to me more about what it would mean to pay off significant student loans for years after graduation. While I may still have chosen my dream school, it would have helped to have a better idea of what I could expect in terms of student loan payments in the future.

1. How to Bank

Although I had a job in high school, my parents never taught me how to do basic banking — like balancing my account, writing checks or doing other basic functions. While most of this can now be done online, I wish that my parents had stressed the importance of good banking habits to me — so that I could have avoided some of the overdraft and over fees that I’ve incurred as I have learned to navigate the world of personal finance on my own.

 


About Guest Blogger, Lauren Davidson

Lauren Davidson is a soon-to-be graduate from the University of Pennsylvania with majors in English and Communications. As she shifts into the “real world” she hopes to start a freelance writing side hustle to help pay down her student loan debt.