Gail DonaldsonI have many friends who are watching their kid’s graduate high school this year.   Our turn will be next year and the thought of sending our daughter away from us to attend college is exciting but sad.  I remember when I moved away from home and the temptations of being my own “boss” was liberating and yet frightening.  We pray we give our children the tools to not only be successful in the classroom but remain true to who they are as a person.

As a consumer bankruptcy attorney, I see that many of the financial problems my clients have as adults started in this transition period from “teen to adult”.  With that in mind, I created a list of financial tips for teens entering college:

Know Where Your Money is Going

Whether you will work in college or have the luxury of parents footing the bills, you need to know where your money goes for everything.  Create a list of expenses that will be required every month whether you live on or off campus.  Live within those limitations.  Keep in mind that the little things like having that morning coffee or espresso every day will add up quickly!

Learn to Save

A checking account is different than a savings account. Checking accounts do not earn any interest while savings accounts do.  Only keep the money in the checking account you need to pay the essentials bills.  Learn to save something every month.  It’ll add up and be a good emergency fund.

Avoid Fees

Never pay ATM or checking fees. Learn how to balance your checkbook and never incur overdraft charges from your bank.  There are banks that will not charge ATM charges no matter where you bank or bank where there are lots of branches near your college.  It’ll be even better if your parents bank at the same bank so funds are easily transferred from their account to yours.

Don’t Buy What You Can’t Afford

Do not charge money to your credit card that you cannot afford to pay. Most credit cards will give you a small limit when you are starting out—don’t get trapped by not paying off the balance owed each month.  Before you know it, the amount will balloon to three or four times what you spent.  If you cannot pay off the balance, do not charge at all.

Avoid Credit

You should avoid credit cards at all costs. Most have really high interest rates and prove difficult to pay off.  This is an area I see a lot of my clients going wrong early in their financial journey.

Pay Off Your Balance

If you have a credit card in your name, paying off the balance each month will begin building your credit worthiness.

Student Loans are for Tuition

If you have to obtain student loans, only use the money for school. Student loans are non-dischargeable for the most part and will follow you for life.  I see so many clients who borrowed more than they actually needed to pay for monthly living expenses like groceries.  Only use the money for tuition, books or other required expenses for your education since these debts will have to be repaid with interest.  Federal student loans are different that private student loans.  Federal student loans are usually more lenient in repaying options.  Read the fine print to make sure you know exactly what you are agreeing to repay.

Finally, I want to wish a big congratulation to the Class of 2016!  I cannot wait to see where God leads each of you!

If you got off to a bad financial start in college, please call one of our offices to see if we can help you.

Gail Donaldson
Written by Gail Donaldson

Gail Hughes Donaldson is a Managing Partner of the Bond & Botes Law Offices in Montgomery and Opelika, Alabama. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She’s been helping families work through the bankruptcy process since she started with Bond & Botes back in 1993 as a paralegal. Read her full bio here.

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