Since the start of school year is right around the corner, for this week’s Money Chat, the MyBankTracker team felt it would be fitting to discuss how our parents taught us to be financially ready for college. Leave your college financial readiness story on our Facebook or in the comments below!
Simon: I didn’t have a checking account before college, so I used to just carry around cash and right before I went off to school, my parents and I did the standard protocol of opening up a checking account. Whenever we went to check out a school, we were always checking for ATMs on or near campus, and the school I settled on had a Bank of America® nearby, so that’s when I opened up an account and began using it during the summer.
Claire: Did your parents give you an allowance or did you take out loans?
Simon: For school, they said, “Anything that’s school-related, we’ll pay for.”
Kat: That’s exactly what my dad told me! My story’s exactly the same. We opened up a checking account, my dad told me any school-related costs he and my mom would pay for, and my allowance did increase a little bit to allow for more expenses like lunch while at school or snacks for class.
Simon: No allowance for me!
Claire: Simon, did you work?
Simon: I worked for two years in high school already so I saved up some money (after buying sneakers).
Claire: You saved up for college?! I don’t know how you could be in high school and not spend all of your money!
Simon: It was only sneakers! Sneakers and food, just those two things.
Kat: What about you, Claire?
Claire: Well, let’s see… my parents did not teach me anything about what to do for college because they didn’t know either! I had a checking account in high school, which I think was a Bank of America® account as well. And then I got to school, and I took out loans. My parents paid for my dorm room for the first quarter of freshman year I think, and then after that I was like, this is too expensive. So I moved out with two people who were actually already living in an apartment.
Kat: How did you pay for that apartment’s rent?
Claire: Hmm, well they basically let me stay there for free, because I cleaned up. I was living with two guys, so I’d clean up the place for them, and they were never home. One of them had a gambling addiction actually, so he was always at the casino! And the other guy was very religious, so he was always out doing church-related stuff.
Simon: You had a place to yourself for free?
Claire: I paid for electricity, and utilities which was like $100.
Simon: So you did that for the next 3 years?
Claire: No, I did that for the last half of my freshman year. And then after that I found a roommate to live with.
Simon: Why wouldn’t you stay there though?
Claire: Well I had to sleep in the living room… and I wanted my own room at some point? I was kind of slumming it my freshman year. Other then that, just took out loans for my tuition, which was nothing compared to what it is now. I think tuition was like $1,200 dollars.
Kat: I don’t know how relevant this is, but my dad worked at Columbia University for 8 years and he stayed there that long because of the perks that came with his job, specifically the benefit of having half of his children’s college tuition paid for by Columbia. And, it would have been completely free if I went to Columbia. So that was pretty amazing, and he did it for us and I appreciate that sacrifice. And also, since I went to Fordham, I didn’t dorm. I had a lot of money given to me by Fordham because they were pretty generous with my financial package, and I just really lucked out. That’s why I only have $2,000 to pay off, which I’m paying monthly payments for now.
Claire: How about advice? Did your parents give you any advice before heading off to college?
Simon: They were like if you need money just tell us, but I never did.
Kat: Well my dad, I didn’t want to use a credit card at first, I had seen a documentary about the horrors of using credit irresponsibly, and I didn’t want to go there, but he pushed me to start using credit.
Simon: Wait, you got a credit card in college?
Kat: Yeah, my first credit card and my first debit card and I just really did not want to use it at first. But my dad pushed me to use it and use it responsibly, because he knew I had to start building my credit.
Simon: You were 18?
Kat: Yeah I was 18. What, when did you get your first credit card?
Simon: When I was like 20.
Claire: I’ll never understand how young people, high-school aged or college, can save money because as soon as you have it, don’t you feel like spending it?
People that age like to party so they need to look good, and want to buy the nicest clothes, and then they most likely are going to house parties, so they need to buy food and liquor.
I got my first credit card in college. They would set up these booths on campus and you would get free t-shirt and gifts for signing up, but I think that’s illegal now. I would see crowds of kids surrounding the booths, so I would go check it out. I think I got my first credit card from Citibank.
Kat: Wait, what?
Simon: You can’t get a credit card under 21 now, you can’t market a credit card to people under 21. Credit Card Act of 2009.
Kat: Oh wow… I got mine in 2008, so I guess that was right before that got passed.
Claire: My credit card limit was $500, and I felt like it was free money! Should I go on a mall, should I take a trip? That was a lot of money to a broke college kid.
Kat: Ha-ha, I’m the same way now.
Claire: And I didn’t pay my bill for a couple months, and eventually my credit card company called me!
Kat: My dad sat with me for the first two months and we always paid my bill together so I could always get used to the process. So he kind of instilled that responsibility in me, because it became like muscle memory from our habit of always paying it every month.
Claire: Yeah, that’s how parents should teach their kids.
Simon: My parents don’t understand that kind of stuff at all.
Kat: My dad is actually like my financial adviser. I recently got some money from a relative that passed away and my dad scooped it up and put it in an IRA for me… -sigh-
Claire: Well, that’s good though.
Kat: It’s true, but I’m like, can’t I have a little of it!?
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MyBankTracker readers, were you financially prepared for college? Tweet us @mybanktracker!