With millions of students across the country heading to college in the coming weeks, a Wisconsin-based financial planner says now is a great time for parents to talk with their children about staying financially healthy.
In this week’s edition of On Your Money, Kevin McKinley of McKinley Money, says there are a few key areas that should be addressed:
Have your children track his or her spending.
McKinley says your kids should keep tabs, every day, on what they’re spending money on and review it monthly, taking note of what’s risen or fallen over the previous month.
“She can isolate some things and say, ‘Gee, I spent 100 bucks on pizza last month,’” McKinley says. “’Maybe I should dial that back a little bit, and that’s also the reason I have to go out and buy a new wardrobe.’”
Parents should have access to kids’ accounts.
McKinley says it’s a good idea for parents to not only see where their kids’ expenses are going, but to make sure there are adequate funds and that fees are not being racked up. However, he warns that there may be resistance from your children.
“If the kid balks at it, you can make it a condition of their support and say, ‘Look, while we’re responsible for your finances, we have to know where the money’s going,’” says McKinley. “Therefore, you have to give us access to your account.’”
McKinley also advises parents consider freezing their kids’ credit reports. He says while the law prevents children under the age of 21 from opening a credit card without parental consent, they are allowed to do so if they have income. Learn more about freezing credit reports here.
Credit card access
For cases in which students need credit card access, McKinley says it’s advantageous for parents to add their kids’ names to their card and set boundaries for when they can use it.
“The parent actually gets control of the card and can cut the kid off at any time,” says McKinley. “But the kid still has access to it if there is, indeed, an accepted emergency.”
Call your insurance agent
McKinley says it’s a good idea for parents to call their insurance agent if their teens are out of the house and not driving because it could result in a lower auto premium. He also recommends making sure they have renters insurance if they’re going to be living in an apartment while in college.
Further, McKinley says parents should ensure that their kids are covered under their health insurance policy, and that they have HIPAA documents signed.
“If something does happen to the kid, you have immediate access to his or her condition already pre-established rather than having to scramble around at one of the scariest times in a parent’s life.”
On Your Money can be heard each Tuesday from 8-9 a.m. on the Ideas Network. E-mail your personal finance questions to onyourmoney@wpr.org.
