Back-to-school: Sex Drugs and . . . Credit Cards? LSU AgCenter Family Economist Offers Money Primer

Jeanette A. Tucker  |  4/19/2005 10:28:33 PM

News You Can Use For July 2004

As you prep your college-bound kids for all the perils in life, don’t forget money management, advises LSU AgCenter family economist Dr. Jeanette Tucker. As your young adults pack for college, the last thing you, as a parent, may be worrying about is whether they can balance a checkbook.

Yet, for many students, the combination of leaving the nest, managing one’s own money, making new friends and living an exciting social life is a formula for financial disaster.

"Don’t assume that your child learned about money in high school," Tucker says, noting that a recent survey by the Jump$tart Coalition for Personal Financial Literacy, revealed that only 15 percent of high school seniors reported receiving some sort of personal finance education in high school. On average, the students surveyed received a score of 52.3 percent on finance-related questions. Louisiana students fared even worse, answering, on average 46.0 percent, correctly. Hardly a passing score!

"Don’t panic!" Tucker counsels. This is not the time to confuse your student by rushing into explanations of complicated financial procedures. It is more important to make certain he or she understands the basics of how to stick to a budget, pay bills on time, handle credit responsibly and balance a checkbook.

College can be a real wake-up call for teens accustomed to obtaining money on an as-needed basis from their parents. So, begin by helping your student devise a budget before he or she leaves home. Total the amount of money, if any, that your child will receive each month from you, earnings from work or other sources such as scholarships and savings. Then list the expenses he or she will be responsible for each month, and determine the best way to make that income cover financial obligations. Help the student make certain the budget is realistic and manageable.

If students need to open a new bank account, involve them in searching for the best type of account for the balance they will be keeping. Shopping for an account also can help them understand the costs associated with bounced checks, ATM fees and other financial services.

Make certain your child can track transactions to manage the cash flow. The convenience of debit cards and ATM machines often overshadows the importance of tracking expenses and balancing their check register.

According to Nellie Mae student loan center, the average credit card balance for undergraduate students is $2,748, and many schools are reporting they lose more students to credit card debt than to academic failure. Your best defense may be to see that your child has a credit card before he leaves for school. By being involved in the process, you can help him or her select an appropriate card with a reasonable credit limit. Receiving a monthly statement and seeing how fast charges add up may be as valuable an educational experience as Freshman Math.

Be sure to talk to your child about when it is and is not appropriate to use a credit card. Explain there is a difference between charging for car repairs and a frozen cappuccino. It is also helpful to discuss the repercussions of not paying bills in full each month. Learning that $1,000 in credit card debt at 18 percent will cost $2,352 and take more than 12 years to pay if only minimum payments are made each month can provide a real shock.

Last, Tucker says to discuss the importance of paying bills on time each month. Overdue payments not only face late-payment fees, they can cause serious damage to credit reports, often making it tough to rent an apartment, buy a new car or even get a job after graduation.

For information on related family and consumer topics, visit the FCS Web site at http://www.lsuagcenter.com/Inst/
Extension/Departments/fcs/ For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.

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On the Internet: LSU AgCenter: http://www.lsuagcenter.com/Inst/
Extension/Departments/fcs/
Source: Jeanette Tucker (225) 578-1425 or Jtucker@agcenter.lsu.edu

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