College isn’t just about learning academics that apply to your major.  Nor is it solely about the “freshman seminar,” taking classes in French literature or archaeology.  College is the place where our children go to learn life skills that lead to a life of independence.  One of the most significant areas of growth should be in personal finance.  Is this a class they take?  Sadly, not in most institutions.  But as parents, we should lay out a plan with milestones to help them reach financial independence by the time they graduate college. 

I see this question often “how much should I give my son every month for allowance?”  Or, “my daughter ran up 10k on our credit card. Now what?!”  Fortunately, with good planning we can avoid (mostly) a crisis. 

I suggest when your student turns 18, they apply for their first credit card.  There are many good first-time credit cards for students.  Personally, we used Capitol One.  A simple Google search will bring up a string of offers for you to sort through.  Select a LOW credit line.  Many student credit cards will start at $500, which I find perfect. 

Now, notice I’m saying credit card.  Not a debit. And not as an authorized user on your card.  This will help your student not only learn about credit but also grow their credit score to be ready for graduation!

For credit card newbies, select something they need regularly like meals, gas, etc and tell them to put that on the card.  Make sure they know the limit and due date.  This is a great way to get the in the habit of being aware of a bill coming due in addition to budgeting to make it to that date.   And for newbies, mom and dad should monitor the due date, expenses if there are issues, and make the payment.

For second year students, I recommend that instead of mom and dad paying the bill, you send them the money and have them get used to making the payment.  This takes a bit of work sending them the money and making sure they use it toward their balance, but it’s well worth it in the long run.

What comes next?  If your student has a job, even if it is only during breaks, have a discussion about what they will contribute financially to paying this credit card.  Maybe they’re taking over gas, or hair appointments.  This will teach them more budgeting.

Lastly, and this is a big move, have them take over knowing the date the bill is due and making the payment.  Of course, they’ll be using some portion of your money but put them in the driver’s seat keeping track of everything and making payments. 

By the end of senior year, your student should be used to budgeting, tracking due dates, transferring money and scheduling payments.  And, they should have a great credit score!

PS  I know Venmo and all the other cash apps are super convenient but they don’t help build your student’s credit score!