Personal Finance Talk with your College Child

Aug 2019


It’s hard to believe, because it seems that summer just started, that students will soon head back to college. Particularly if you have a child going away to college for the first time it is important that you have the conversation with your child about finances. I cannot stress enough how important this conversation is. After all, when your child goes to college, they are an adult and as a result, they have adult responsibilities. Therefore, while you still have some time before school starts, it is necessary to have that conversation with them.

It is important that as a parent you recognize that if your child runs into financial difficulty, it could be a stain on them that lasts for years and years and could not only affect their personal finances for years to come, but also hinder them in obtaining employment. In the past, financial mistakes made in college were not very relevant; today, they are. In addition, you have to recognize that your student is going to be faced with all sorts of financial challenges. They have to learn that just because a charge card company is giving them free stuff to sign up doesn’t mean they should take it. They also have to learn that particularly with charge card companies, there are no free rides. My philosophy is it’s better that your kids learn personal finance from you as opposed to the charge card companies who will teach your child to spend, spend and spend some more.

Not every child going to college is faced with the same challenges. Some will need student loans and a job to make their way through school while others will not have the same pressures. Therefore, you need to focus your conversation on the issues that are relevant to their individual situation. Some kids will need to live on a strict budget while other kids will have a little more leeway. That being said, I believe there are some basics that every college kid needs to know. The first of these is how charge cards work.

It is amazing to me that so many kids don’t understand how charge cards actually work. They don’t understand how interest works or how if you only pay the minimum how expensive using a charge card can be. Your job is to teach them those things so that they will automatically think twice before they sign up for a new charge card or before they actually charge something on the card. The lesson that I would teach them is that charge cards should be used for convenience and convenience purposes only and in addition, if you cannot afford to pay for a purchase when you receive your charge card bill, it’s generally a clear sign that you cannot afford the purchase. It’s also a good idea to remind them that when you use a charge card you cannot be late on your payments. Not only is there the cost, but also the risk of it ending up on their credit report which could impact them for years to come.

College kids also have to know there are consequences when they sign their name to a contract. Whether it is for a lease, phone service or cable. They need to understand the terms of that contract and what their obligations are. They have to recognize that because they are adults, once they sign on the dotted line, they have responsibilities and obligations and if they don’t live up to them there could be severe financial consequences.

When I went to college, society was not nearly as complex as it is today. No one was soliciting and enticing college students to sign up for charge cards and no one ever heard of credit scores; today, those are realities. Therefore, as your child gets ready to go to college, whether it’s for the first time or not, it is important that you sit down with them and have a serious conversation regarding personal finances.

Good luck!


Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email Rick at