This list was reverse-engineered by people who know. It comes from the National Foundation for Credit Counseling, the umbrella group that includes Consumer Credit Counseling Service, the in-the-trenches non-profit that helps people pick up the pieces when they screw up their finances in colossal fashion.
“Whether it’s off to work or off to college, parents put a lot of time and money into preparing their child to leave home, but often neglect the basic life skills associated with personal finance,” said Gail Cunningham, spokesperson for the NFCC. “With just a few weeks until young adult children will head out the door, the time is now for a crash course in personal finance.”
Here are the 4 key areas of money knowledge NFCC has found people leaving home for the first time desperately need.
Parents and college students should work together to create a realistic monthly budget. Students should then track their spending at college on paper, with a smartphone app or a budgeting website. The method isn’t important, but knowing how the money is being spent is.
People don’t write as many checks as they used to, but it’s still important to record all different types of withdrawals in a check register, whether paper or electronic. Embarrassing confession: when I opened my first bank account, I carefully recorded all checks I wrote, but neglected to record ATM withdrawals and then started bouncing checks. Doh!
When I was in college, banks gave out credit cards faster than frats gave out beer. Today, young adults under age 21 cannot obtain a credit card unless they can prove they have the ability to pay or they have a co-signer. Still, many college grads manage to rack up credit card debt and struggle to pay it off. Instead, teach your kids to use small amounts of credit and pay it off in full and they will develop solid credit scores that help them get jobs, rent apartments and buy cars when they graduate.
We all need to be on guard about identity theft and college students even more so. The identity thief may not be a stranger, but the tech-savvy neighbor in the dorm room down the hall. Password-protect computers and phones, since they contain financial information and be careful what you post on social media.
One final note to students and parents: financial organization counts. Whether you use an accordion file or a high-tech tool, it’s essential that you stay on top of your bills and due dates. Paying even a small bill late will subject you to late fees in the short term and tank your credit score in the long term. You don’t want to have a “financial hangover” that lasts long after you graduate from college.
Opinions expressed in this column are solely those of the author.
Elisabeth Leamy is a 20-year consumer advocate for programs including "Good Morning America" and "The Dr. Oz Show." She is the author of Save BIG and The Savvy Consumer. Elisabeth is also a professional speaker, delivering talks nationwide on saving money, media relations, and career success. Elisabeth receives her best story tips from readers, so please connect with her via Facebook, Twitter or her website, to share your ideas.