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NORTH TEXAS (CBSDFW.COM) – Many college freshmen will soon be moving to their new campuses. They may have all the essentials they need for college, but when it comes to financial education, experts say many of them deserve an “F”.
According to a new study, only 39-percent of college freshmen actually use a budget. “They don’t know what a budget is, they don’t know how to treat their credit cards,” explained Jim Lacamp, a financial expert in Fort Worth.
Lacamp says there are three common money mistakes college students make:
1) Not knowing how much money you have – Most college kids don’t know how to budget. Lacamp says it is important for a college student to learn how to balance a checkbook. “They need to learn to record every purchase,” Lacamp told CBS 11 News.
2) Relying too heavily on credit cards – Lacamp says while it helps build credit, purchases can go out of hand if you’re not careful with credit cards. Lacamp says too many students use it as an unlimited checking account.
3) Overspending – LaCamp says students do not calculate how fast four-dollar coffees, twice a week, can add up. “It doesn’t seem like that much of an additional expense but you add up over the week and over a month and semester. it makes a big difference in their budget,” he said.
And it’s not just the young adults who need to be careful, parents also need to be aware of their kids’ spending habits.
Here’s what parents can do:
1) Sit down with your child and make a budget before he/she goes to college. Explain the fixed expenses and make sure your college student knows how much money he or she can spend.
2) Encourage them to use cash or debit so they know exactly how much money they can spend.
3) Consider opening a checking and savings account to encourage them to save.
Remember mistakes made early on can impact their credit scores down and line.
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