Teaching a College Student About Money Management and Identity Protection


20 percent of college students are facing financial hardships because of debt, according to recent statistics from the Federal Reserve, the Join Economic Committee, Sallie Mae and TransUnion on Statisticbrain.com. To prevent your child from becoming part of this statistic, sit down and discuss money management before sending them off to college. By taking an active role early, you have the best chance of preventing your child from becoming the one in five who is struggling to control their financial situation.

Debt in Young Adults

Financial responsibility is a new idea for your college-bound child. Even if, you have taught your child to appreciate money and save, getting out of the house provides a new freedom that can lead to debt problems.

According to the Better Business Bureau, consumer credit debt is fast approaching a trillion, and overdraft charges on credit cards are adding roughly $10 billion yearly on consumer accounts. On top of credit cards, CNN Money suggests that young adults who are graduating college average $27,000 in student loans.

Candidly discuss the responsibility of debt and explain the types of debt your child will face after leaving home. Student loans and credit cards can add up quickly, especially if your child isn't prepared to handle every personal expense.

Help Your Child Create a Realistic Budget

When explaining the importance of money, help your child put normal expenses into perspective.

Estimate the cost of groceries and other basic necessities for your teenager before he or she goes off to college. Even if, your child plans to stay in the dorms, monthly expenses like a cell phone and text messaging can add up.

When helping your teenager create a realistic budget include scholarships and college expenses, such as books and lab fees, into your plans. Even though, a scholarship is put into tuition first, your child might obtain additional funds that exceed the tuition amount.

Discuss Interest Rates on Loans

Although you don't want to scare your children into completely avoiding loans and credit cards, you do want to instill a healthy respect for the interest rates and fees that add to the account. According to CNN.com, showing your child the financial damage that comes from a credit card with 17 percent interest will help.

Talk About the Dangers of Credit

Although it's tempting to avoid discussing problems like identity theft and online purchases, take time to talk about the financial dangers that come in the form of scams, and other challenges.

According to Carnegie Mellon University, children and teens are a primary target for identity theft because they don't yet have any credit. Explain what identity theft is and the common ways an identity is stolen and the protective measures that your teenager can take to limit the risks. Encourage them to explore the topic further on their own and find ways to protect their identity. For social media-obsessed teens, the Lifelock Twitter page offers an exhaustive amount of advice for protecting against identity theft.

Risks of Online Shopping

Talk about the dangers of making online purchases before your teen leaves for college. Show your teenager safe ways to make purchases online and how to research a company to ensure it's legitimate before buying any products from the company.

Taking the time to teach your child about the dangers of online shopping, budgeting strategies and credit management can reduce the financial risks that your child will face. It's your responsibility to discuss ways to protect against identity theft and avoid the debt problems that many young adults face.

Blog authored by Jackie Moore. Jackie is a financial manager at an independent bank in Alabama. She shares advice on budgeting and finance for small businesses and homeowners.