Commentary: Kids need money knowledge and book smarts
By Chuck Jaffe, MarketWatch
Last Update: 1:28 PM ET Aug 16, 2012
ASHEBORO, N.C. A few hundred miles into the drive from Massachusetts to North Carolina, my daughter Whitney asked if every parent taking their kid to college talks about this stuff.
No, they dont.
Then again, most kids dont have a financial columnist for a parent.
The talk we had along the way to her small school in North Carolina was about financial consequences in a world where the nave are all too often prey for the greedy and the nasty.
In maintaining social media connections through much of the 16-hour drive, Whitney confirmed with friends that their parents had not had these discussions. And the more they heard from her about it, the more they seemed to wish their parents would have said something.
So, for parents who are sending children to college at this time of year, here are the financial topics I made sure my daughter heard from me before she set off on her own.
Your kids may not like having to sit through the lesson any more than mine did, but the discussions that come out of these topics and the comfort both of you will have that the message has been received are well worth it.
1. Youre not protecting your privacy, youre safeguarding your future.
Kids these days carry so much information about themselves on smart phones and in their wallets and post so much online that they fail to realize how those details can be used against them. Likewise, they have so many Facebook friends or Twitter followers that they are easy victims for phishing scams and fraudulent emails.
Whats more, its easy to put your guard down for someone who is linked to you because they are a friend of a friend.
When someone sees your phone and says it looks cool and asks to see it for a minute, dont give it to them. Imagine what a bad guy can do with all of your information at their fingertips for just a minute or two. When someone volunteers to grab your mail, youre giving them access to your first credit-card offers or other personal information (papers you should also shred when you get rid of them).
Dont be too lazy to use the safeguards, or too trusting of anyone who has not proven to you repeatedly and in person that they deserve your trust. (For people like Whitney, arriving at a new school, the best starting point is Trust no one.)
Young people are the easiest marks for identity thieves, precisely because they are most casual about their information, and because they dont think they have anything worth stealing. Yet ID crimes are not about what someone has theyre about what that someone without morals or scruples can get away with.
2. What you say and do today when you dont think what you say and do really matters could cost you tomorrow.
Political candidates arent the only people facing scrutiny of every little thing they have said. So are students applying to graduate schools and kids looking for jobs. In a world where its hard to stand out from the next person trying to achieve the same goals, its important that you dont stand out in a bad way, giving someone reason to give an opportunity to the other guy.
Its not that youre not allowed to go to parties or have fun, but you dont need to broadcast every stupid thing you do in college. The world expects college kids to have the moments when they act like idiots; make sure your moments dont last a lifetime.
When in doubt, keep your escapades off of Facebook and your comments off Twitter; that way, you will have nothing to regret later.
3. Emergencies get worse if you dont plan for them.
I asked Whitney before we left to give me her wallet, and then to tell me everything she had in it. She got most of it right, but not quite everything.
I then asked if she knew who to call if she lost her wallet especially if it happens at school, so far from home.
Then we made a copy of everything she carries. She also stopped carrying things she no longer needs, such as a reward card from a favorite frozen yogurt shop that could give an ID thief another entry point.
The copies stayed at home, and the plan is that a lost wallet triggers the call home, where we can spring into action with account numbers and make the requisite calls to notify everyone.
Just trying to name what she was carrying proved to her that her plan for that kind of problem was inadequate. We talked about all of the other potential scenarios for emergencies, and how she would handle everything from transportation troubles to emergency medical care to incarceration and more.
No one expects their kids to face these problems, but if the worst-case happens, it pays to be calm and prepared.
4. Dont assume everything in the fine print is fine.
Whether its a credit-card offer, a chance to get some freebie while signing up for a subscription (where you can then cancel the service but keep the goody), some coupon deal, or a big-ticket purchase, the first lesson every consumer needs to know is that the fine print is there to protect the provider, and you can assume as the customer that all it really means for you is trouble.
If a deal sounds great, read the fine print. Thats generally where you can find out the terms and conditions that could make it too good to be true.
5. Timeliness is next to godliness.
Kids who get their first credit cards or have their first bills to pay seldom recognize that its far more important to make timely payments than to make big ones.
Feeling a financial pinch, they will let a small payment slide, figuring that they can make a bigger payment later that will appease the lender or even satisfy the debt. They will ruin their credit record and pay exorbitant fees because what lenders judge you on most is not how much you pay back in any one shot, but whether you make payments when payments are due.
6. Money gives you choices.
What you spend today has a direct impact on what you can do tomorrow, so use what youve got wisely. If you cant remember what you have been spending your money on, you probably would have been better off not spending it.
Make sure the choice you make today with your money truly is worth it. If not, assume something more worthy will come your way and hang on to your cash until then. Youll be glad you did.
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