Suzanne Klenk from Washington State Employees Credit Union joined Margaret to talk about college finances - especially financial needs for students after tuition and books have been paid for.
For more information about Washington State Employees Credit Union, visit their website: www.wsecu.org
Email Suzanne with a financial question, or to arrange a FREE financial workshop for your business or organization: SKlenk@WSECU.org
Here are Suzanne's tips from today's segment:
School’s out! Summer is upon us and the college-bound are busy preparing for the new adventure that awaits them at college campuses across the country. With college tuition, rising 85% over the past five years, according to the Seattle Times, just finding a way to pay for tuition and books is such a huge undertaking that often, the subject of personal finance and how to manage spending is rushed over or not talked about until problems arise.
This is such an important conversation, with college and other costs rising. Getting prepared for that first year away should be a priority, don’t you think?
Suzanne: Yes! This is a critical time for young people and all too often they step out into their college experience ill-prepared for the financial challenges that await them. We are discovering that once the hurdle of paying for tuition is addressed, folks are exhausted and tend to fall into just figuring out the rest as they go.
That seems like a disaster waiting to happen! How can we get prepared with only two months before move-in day? Where do we begin?
Suzanne: The first step is to sit down with your student, pen and paper in “their” hand and write down all the needs. All of them. Books, Food, Bus Passes, toilet paper, laundry soap, etc….everything. It is important for everyone to understand how much money will be required. Then you can decide where and how to spend the funds you have available and make decision to maybe work a few extra hours this summer to beef up your funds.
It is truly like a second household!
Suzanne: Yes, it is. And it should be treated as such. This is even if your student will be living on campus in the dorms and has a lot of services included. A monthly spending plan is necessary to navigate the expenses without causing an enormous amount of stress. More students drop out of college due to financial issues than for any other reason, and in 2012 the Student Loan Debt surpassed the personal/credit card debt in the United States. When a student leaves school, student loans come due. Without a degree, it is even more difficult to find a job to pay off that debt. Again, planning to figure it out later, and when later knocks on the door, we are even more unprepared!
Ok, we have it on paper….Now what?
Suzanne: Well, spending is usually about 10% Math and 90% emotion. College is a whole new world and for many, the first time they will be making decisions about money on their own. It is important to discuss financial scenarios and how to handle them. Spending plans should include fixed and variable expenses, but they must also include a little bit of fun. We recommend no or very limited credit card use the first year. A spending plan takes time to master and learning the lesson of “When it’s gone, it’s gone” or you get out and make a few extra dollars if you need to, is important. It would be a good idea to begin today.
So, have them create a spending plan for college and begin to live by it now….like a practice run?
Suzanne: Exactly. Practice makes perfect. Begin by opening an account that is tailored to meet the needs of students. WSECU has the “Just U” account. This account has no minimum balance requirements, free checks and no maintenance fees or per check charges. It also provides some financial coaching if needed…how to balance the account, utilize Credit Union services, etc. It is also nice to familiarize your student with the local branch, near the school. For instance, if your student is attending WSU, but lives here….ask for a referral to one of our Pullman branches. Or better yet, make the call while you are opening the account and you can be introduced right away. It’s nice to have a contact when you are new in town!
And with Shared Branching, parents can move money from their account to the student’s account with ease!
Suzanne: Yes! Shared Branching is an agreement between participating credit unions to conduct transactions from other institutions. So you can always find a participating branch. Heading to college is such an exciting time, and worries about money can really take the wind out of your sails. Taking these next two months to get your ducks in a row…and getting into the credit union to get things started is a must.