College Student Financial Wellness, part 2
submitted by Amber Schilberg
Gaffney Bennett Public Relations
Did you know that on average, a college freshman spends an extra $5,000 on everyday items during their first school year? That’s in addition to room and board, books and other school-related expenses. Does your college-bound student have the financial smarts to successfully manage their new found financial freedom?
With September being College Savings Month, KeyBank’s Area Retail Leader Mark Commune has some tips for parents to educate students on financial wellness and successfully prepare them for their financial future, such as:
1) Open a Student Checking Account. Students typically have a lower threshold to opening an account and have different perks. To open a student account at KeyBank, you must have $50. Other perks include reimbursement of ATM surcharges from other banks.
2) Review Your Bank’s Overdraft Policies. Does your bank have overdraft solutions? What are the charges? Is there an alert or notification system to take advantage of when funds are low? These are important questions to consider and review with your bank.
3) Practice responsible credit cards usage. While the Credit CARD Act has helped curb college student credit card debt, 70% of students in 2016 carried a balance of $100-$5,000 on their cards. If you need a credit card, keep a zero balance and consider cards with low interest rates, low or no annual fees, cash back or travel rewards, and that offer a grace period.
4) Establish a budget and take advantage of online tools to track spending. By identifying financial fixed expenses and “needs” (books, lab fees, laundry service, groceries) vs. “wants” (club sports, formal events, trips), students and parents will have a better understanding of the cash flow needed to cover the extra expenses. Using mobile banking and other online tools, such as KeyBank’s HelloWallet, to set spending limits and alert you when you’ve reached those limits will help students keep track of their spending.
5) Establish good saving and investing habits. Include “paying” yourself first as part of your budget, and review savings account and investing options with your bank. A small amount every week will help establish an emergency fund, prevent students from needing a credit card, and help achieve retirement or other financial goals earlier.