College Kids Are Clueless About Money: 5 Suggestions to Help Them Along

My younger sister was lamenting to me the other day on the topic of her college winter break.  She hardly got to see her friends because she was trying to earn money for her spring semester textbooks. When she did spend time with them, she listened as they dreaded the day they would have to pay for their own gas, discussed the $7,000 price tag they wanted their parents to pony up for BoTox injections (to prevent sweating) —you see, this is considered a “cosmetic procedure” so insurance doesn’t cover it –, and talking about the luxury brand gifts they “had to buy on their own” (with money their parents had put in their student checking accounts) because their parents wouldn’t buy these for Christmas .

Initially, she was upset because she hardly spent any time with her friends and couldn’t relate with them when she did… but at the heart of the issue, we learned that she was growing up and learning to manage her own money.

Although the conversations appear shallow, we couldn’t blame these friends for not yet knowing the value of a dollar… young adults simply learn to manage money at different points in their lives. My sister is struggling to learn it now, and for that I’m quite proud. I don’t think I effectively managed money until my final year in college!  That was when I took my first personal finance course and the lessons have still stayed with me. I learned the basics about savings accounts, income statements versus budgets, and investing for long-term growth.  Even now, I’m still learning and I know I have a long way to go.

And so, I offer to my sister (and as a reminder to myself) these pieces of advice to further our finance management learning:

1. Ask those around you for their advice and opinion.  Learn from the successes and mistakes of your parents, siblings, and friends.
2. Learn what a Roth IRA and 401(K) are if you don’t already know, then invest in one.  Anyone with a part-time job can start saving for retirement!
3. Track your spending for 3 months… include ALL expenditures and even the spent value off of your gift cards.  Freak out if you must, then use the information to help you make a budget.
4. Make a simple income statement for your own records.  On the left, list your assets, and on the right, list your debts.  Update this periodically to know how well you are growing your wealth (or how hard you must work to beat that debt).
5. Use the internet to your advantage.  Read Personal Finance blogs such as Budgets Are Sexy, Get Rich Slowly, and Punch Debt in the Face… then be inspired.  If you have questions about blog posts and theories, raise them in the comments section!  Not everyone’s advice will be right for your personal situation so make sure you know why it will or won’t work for you. 🙂

And now, I’m just curious:
1. When did you first learn about budgeting and managing your money? What prompted you to learn?
2. What would you recommend to people that want to become more financially savvy?