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How to teach your college student to earn free money

Kimberly Horn

When some young adults get to college, the temptation to spend grows somewhat exponentially. There’s no one looking over their shoulder, credit card offers are endless, and student loans feel like lottery winnings.

If we don’t begin with healthy financial habits at a young age, it can be very difficult to break bad habits later in life.

Overspending $1,000 on a credit card can easily morph into a life of overwhelming debt and a vicious cycle of high interest payments, poor credit scores, and limited financial prosperity. So the question is, are your kids really ready for college?

Here’s how parents can prepare their college-bound kids for financial fitness:

I’m rich from all that graduation money

What is free money?

Everyone gets the concept of “free” so why not explain to your student that coupons and interest accrued in a savings account are basically free money.

Where is all the graduation money they received? Did it go toward new clothes for college or was it placed in a savings account with their bank? Your student is on the right rack if at least 50 percent of their graduation money went into savings. Though when it comes to savings, the more the merrier. But I want to buy that $500 pair of jeans I saw in the Nordstrom catalog! Set a goal for your college-bound student so she learns to save and learns the value of prioritizing. Whether it’s $50 to save for those hair highlights, a coveted video game, or $5,000 for a down payment on a first car, your college student should arrive on campus with a basic understanding of “need” over “want.”

I can own part of Apple?

College kids don’t have to be trust fund babies to “own” a company by purchasing a stock. If Apple is their favorite store, show them the different ways they can participate in the markets. There are great simulated websites where they can build their own stock portfolio, such as, which provides a fun way to learn about investments with “play money.”

Budgeting and saving is too hard

This may be a common complaint amongst our youth, but explain to them that it’s as simple as counting their money. Take out the Monopoly money and make two piles; one is for the monthly income (monetary support from their 529 Savings Plan, parents, or part-time job) and the other is for monthly expenses (gas, car payments, books, etc.). They can start making different piles for each expense if they’d like. This way they’re touching the money and physically putting it in piles, giving them a better visual and tangible understanding of what comes in and what goes out.

I thought the government didn’t own my money

This is something that is sometimes left out of the money conversation between parents and working college students. Show them on their pay stub how much is taken out for Federal and State income taxes, along with the Medicare tax and explain why.

I have a $2,000 credit card limit — let’s go party

Credit card interest rates can tend to dumbfound college students. It is one thing to hear a number, but to see how a minimum payment does not pay off a balance can be very impactful. Some students don’t understand the concept of interest and paying off their balance. Explain to her that it’s best to spend a little on a haircut and immediately pay it back in full. Your student needs to know that he shouldn’t spend it on a weekend in Las Vegas and expect to only submit monthly minimum payments without interest. If your child spends his $2,000 limit at once, he will have to pay that plus the interest if he makes the small monthly payments. It all adds up in the end!

We’re in love and we’re going to get married when we graduate college, pre-nups need not apply

Before they put a ring on it, explain to them that while marriage can be blissful, there are realities that come with it. With your attorney, show them the benefits of a pre-nup and being able to map out the couple’s financial success before they head down the aisle. You never know what can happen. Suggesting pre-marital counseling can go a long way. Your child can discuss with his new partner how they intend on approaching finances. Seeing how this is a large contributor to divorce in this country, it may be wise to begin discussions sooner rather than later.

Handling finances when you’re new to the idea of available “free” money can be tricky, daunting, but still fun. Help ease the mind of your college-bound student by showing him the foundation of income and expenses. The importance of saving by explaining the difference between spending now and saving for later is a vital lesson. Sharing your experiences in a fun way with “play money” or using the mentioned online tools are great ways to get your soon-to-be university scholar engaged and prepared for his financial future.

More about college students

Your college freshman’s first mistake
Quiz: What’s your college parenting style?
Starting a college savings plan for your kids

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