Money Matters for Parents and Students

A few days ago I wrote about how working a summer job provides real world money management skills for older children.

But when young adults are leaving home for the first time to go off to college, they and their parents will need to deal with a new set of financial matters.

Here are a few of the few of the financial decisions that confront students and their parents.

Checking Account

Even if they never write a check, students will need a checking account. That's because these accounts provide for daily withdrawal demand from ATMs and by debit card. The most frequent transaction by a student will be using their debit card and hitting up the ATM for cash. To avoid the $3 transaction fees for using out of network ATMs, look for a student checkigng account at the college credit union or a local bank.

Title the bank account in the student's name with a "pay on death" designation, or POD. This will make the parents the beneficiary of the account upon the death of the account owner.

I know why folks use it but I am not a fan of the overdraft credit feature on checking accounts. This encourages spending money that isn't there and to rack up more fees when used. Parents who want to monitor their students spending can set up on-line access to their students account and also request to receive duplicate statements. With web access, parents can even transfer money on-line to their students account on a scheduled basis or as needed.

Student ID

At many colleges, the school issued ID card doubles as a smart card, which can be used for prepaid expenses such as meal plans and can also be linked to a local bank account and used as an ATM/debit card. Students should keep the student ID separate from their bank account for two reasons: this keeps expenses covered by parents separate from the students other spending money and avoids loosing access to the bank account when the student ID is lost or stolen.

Check back in a few days and I'll write about a few more financial decisions that confront students and their parents.

Ray Martin

View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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