PCFS April Tip: How to Save Money (and Your Sanity) During Your Child's College Years

Cost-Cutters for College Freshman:
How to Save Money (and Your Sanity)
During the Higher Education Years

Dear Parent,

     As you have heard from us repeatedly in the past (and will continue to be reminded in the future), there is no better way to meet the financial requirements of higher education for your child(ren) than to start preparing EARLY.  This makes all the sense in the world, but you would be surprised at how many worried parents come to us at the end of their child’s junior year in high school, wondering how they will make ends meet and still send their child to his or her dream college.  Parents will often procrastinate the preparation for college funding simply because they do not know what exactly to do, or because the numbers intimidate them, or for a host of other reasons…

Can it really come as a huge surprise, then, (especially given this side of human nature), that far too many students are not truly preparing themselves for the practical side of their future college or university studies?  We see it each and every admissions cycle, and because of this experience we have dedicated our continuing efforts to the professional ideal of helping our rising generation of college and university students (and their families) to be optimally prepared for the challenges that await… and that includes academic preparation, social preparation, and financial preparation for the years ahead.

We have tools in place to help with the academic elements of college preparation and application, and we also offer insights into social preparation.  But the financial preparation is something that can make a world of difference for both students and their parents, and it is something that often is lacking across the board. With this in mind, we have decided to devote this month’s newsletter to a series of (often overlooked) financial preparations… targeted especially for students who are getting ready to leave the high school experience behind and make their way into the realm of higher education.  There is nothing like a student who has a proper mindset for college financial management to keep parents happy and keep money dramas at bay!  So with this in mind, we now present some of the best suggestions for financial management from the student perspective.  Consider them, and share them as appropriate with your own college bound student, whether she or he will be leaving this year or in four years… it is never too soon to do so.

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1. Understanding The Concept Of Money

Financial skills are vital to success in life, however it is not something that is usually taught in high schools. Learning about money is a topic that is largely left for parents to tackle, and frankly, many parents themselves struggle with how to understand and manage their day to day work with money. Others are comfortable with money management themselves, but struggle to convey concepts with teenagers. Regardless of which camp parents fall in, it is extremely important that parents take the time to teach their children and eventual college freshmen the ins and outs of money.  These are three particularly important money concepts that a student should master before hitting campus.

A) Teach Delayed Gratification

Our children live in a generation that some people have called the ‘most entitled and most narcissistic’ in generations. While this is how many sociologists view this recent generation, it does not mean that this is how your children will be characterized, nor is it how your student needs to behave with regard to finances.  In fact, if anything, learning financial responsibility in these times puts a young person far, far ahead of most of his or her peers. Students who have everything handed to them for college are not afforded the opportunity to learn from working towards a goal and reaching through their own efforts.

This is a basic principle, but one that every child should master… especially before tackling college, which is a different world from high school. If there is something that your child has wanted to buy or wants to experience, ask him or her to think of ways that he or she might be able to achieve that desire or goal. Letting them work out the details is just as important.

They will likely feel empowered in their decision-making skills and more motivated to move forward. You can offer ideas and tips, but it’s important to let them figure out how to accomplish a financial goal. Experiencing struggles and hang-ups along the way can be a valuable teaching tool, as well. We all experience strife and struggle eventually, and letting your child navigate challenges in order to reach a particular goal will strengthen their character and provide valuable problem solving skills for down the road.

B) Do Not Hesitate To Price-Compare Colleges With Your Child

As we have shared in past newsletters, the price of college has outpaced inflation for decades. Getting through college now costs more than it ever did, and it will be worth your while to do some thoughtful comparison shopping in this most important purchase… and to do it with your child. If you or your child are planning on taking out loans then find out which schools offer exactly the program he or she is looking for, and which ones offer the most education and opportunities for the best price.

Remember that it is important to compare many factors, just like with other purchases… both large and small. Schools in major, metropolitan cities may be very attractive but the cost of living in many of those cities will be substantially higher than colleges in more rural or suburban settings. Tuition is just one of many areas of cost. There are many more things that will affect the bottom line, and looking at all the fine print and small details will give you a clearer picture of how much things will really cost.

C) Foster Credit Card Responsibility

The credit card problem is a trap in which many new college students find themselves, and it can absolutely destroy a college student’s finances before he ever graduates. If your child has not had his or her own credit card before starting higher education, it can be quite dangerous to let them start out in college. Credit card companies specifically market to students and can wreak havoc each and every semester with their promise of “free money” and “convenience.”  

With that said, responsible credit card use should definitely be addressed prior to college.  This can entail using pre-paid credit cards that can be managed and ‘topped up’ by your child whenever possible.  Teach your child that a regular credit card should only be used if the balance can be paid in full by the next month. Interest compounds very quickly and those purchases will add up to a whole lot more than s/he originally thought. Credit card companies charge unbelievably high rates to their college student customers, and this can only compound problems with financial management later on.

2. Learning To Make (And Keep!) A Budget

Budgeting is vitally important for managing funds in any time.  (Yes, it is even important when there is plenty of cash available… perhaps less common, but every bit as important.)  But when money is limited, it becomes absolutely imperative.  We find that it is especially crucial during college when the funds spent often affect not only the student, but the family back home as well.

It is important for your child to learn to list all of the funds that are coming in over a period of time, as well as listing all of the expenses.  This means covering ALL of the expenses.  Students who can honestly master this specific skill will save themselves a ton of pain later.  This includes books, going out money, food, etc.  Literally everything needs to be included in the monthly (or weekly) budget, in order for things to be managed properly.  

In addition, students should plan to keep some money aside for emergencies each month, to cover unexpected expenses.  For managing sudden surprises, mom and dad should not be the first number on speed dial when it comes to a financial emergency.  However, many so-called ‘emergencies’ are borne out of poor planning.  It is important to realize that the more independent your child becomes at budgeting early on, the more prepared he or she will be in managing life after school.

3. Foster A Working Partnership With Your Student

During the period in which you are preparing for the college years, it is important to maintain a sense of partnership with your future college student.  This can be challenging at times in almost any family, but it is of extreme importance.  While some will advocate “tough love” when it comes to financial planning and budgeting, it is important to let your child know that you have his or her best interest at heart, and to set a financial framework for college assistance in accordance with the family’s wishes and financial circumstances. If children understand the framework for their college funding, the will also be more likely to grasp what to expect with their financial experiences in college or university.

Include your child in your own budgeting and financial planning activities. Have an open dialogue as early as possible about the importance of budgeting and financial planning. The more comfortable you are then the more comfortable your child will be. They will also build their confidence as a result.

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    If parents are willing to take the steps necessary to help prepare their high school student for the financial responsibilities that are a huge part of the college and university experience, they will usually notice that they are much more relaxed than their friends and neighbors who did not do so.  This is another thing that we see year in and year out… preparation is key to preventing stress, preventing headaches, and preventing dropouts.  The same principles obviously apply to parents, which is one of the main reasons that we as college funding professionals are here: specifically to help the families of college bound high school students with all of the requisite aspects of their preparations, so that they can best manage the challenges and financial outlay involved with higher education.

    As a part of our continuing work in this realm, we are proud to offer live, detailed, focused College Funding Workshops for the parents of rising college students.  These special programs are presented in-person by top college funding professionals, and they are prepared especially to meet the needs of the parents of students who are readying themselves for college or university study in the future.  For your schedule, we always make sure to plan the workshops at the most convenient times for parents, even on weekends in consideration of work schedules. There is no admission fee to these workshops, but because of space limitations and for optimal planning of the presentation, we always require advance reservation.

    For more information regarding the upcoming College Funding Workshops planned in your area, feel free to send us an e-mail at: lynn@pcfs.co or al@pcfs.co.   We can provide schedule updates, answer any questions about upcoming locations, and help with specific information regarding the actual workshops.  The staff can also help you in making a reservation for an upcoming workshop in your area.  We hope that we will see you soon.

    We also offer a special written report created to assist with the financial aspects of funding for a college or university career.  This published report is designed for parents and covers special details with regard to the college funding process.  We are very proud of this report, called “Nine New Ways To Beat The High Cost of College.” This resource, also available without cost or obligation, provides key insights about the financial preparation required before the college or university years begin, as well as vital information about the financial aid process.  

    To receive your own copy of the “Nine New Ways To Beat The High Cost of College” report, just e-mail us at: lynn@pcfs.co or al@pcfs.co.  It will be our pleasure to send you a free copy of this important report immediately.

Until next month,