College Crisis: Financial Planner Warns College Students Setting Selves Up for Life of Debt With Lack of Basic Personal Finance Skills

May 1, 2015

from Business Wire

moneywatchThe average college student graduates with debt in excess of $30,000. The parents of many of these college graduates are erroneously dipping into their 401(k)s to help defray some of these costs, and all but guaranteeing that their children will one day have to take care of them.

Financial planner Michelle Perry Higgins believes we have a crisis on our hands. A crisis that begins upon graduation from high school and the inadequate impartation of basic personal finance skills to ensure students stay on a budget and manage their finances effectively to avoid being saddled with insurmountable debt and/or causing financial ruin for their parents.

“We need to launch our children off to college with strong money management skills, otherwise it is too late,” said Ms. Higgins.

In her forthcoming book, College Poor No More: 100 $avings Tips for College Students (May 2015, New Year Publishing), Ms. Higgins offers sage advice from how to budget, cut costs, and be frugal all while still having fun.

Below, Ms. Higgins offers her top four tips to college students.

  1. Budgets are sexy.

Learning to stick to a budget is a sign of being a mature adult. Create budget sheets which indicate money coming in (job income, financial aid, parental allowance) as well as money going out (rent, electricity, groceries, social expenses).

2. Never borrow more than you can pay.

The more you limit the amount of money you borrow, the less you’ll have to pay back in the future. Just because you qualify for a big loan, doesn’t mean you have to take all of it.

3. Take advantage of student discounts.

Local businesses thrive on student traffic and understand students are on tight budgets. Always use a coupon and ask for a discount.

4. Get a job or internship if cash flow is tight.

If your allowance isn’t cutting it, find a part-time job.

Graduating from college without unnecessary debt is critical to starting off on the right foot.