Students beware – quick guide to financial literacy
As students head off to college, parents should be aware of the need for them to have some degree of financial literacy. As a parent of a college student, I’ve seen the lure of easy credit dangled in front of my teen’s eyes as he routinely gets offered credit cards and tuition loans. A friend tells of freshman orientation at an out-of-state institution last year where the local banks were in the lobby, offering student checking accounts with debit cards – the fine print was certainly buried and they had no idea that automatic overdraft protection was bundled into the account. This specious “service” basically allows students to overdraw their accounts and then hits them with penalties and shockingly high interest rates. The student was home on vacation and carefully checked his balance at the ATM machine before using his debit card, little realizing that he was being charged a few dollars each time he checked, further whittling away at his available funds. Within a few weeks, he got a phone call from the bank about the $120 in fees and penalties owed to them! So, is your college student prepared for financial independence? Is he or she ready to handle a credit card, budget expenses and live within available means? While researching this issue, I discovered that Massachusetts has launched a financial literacy program called HiFi which trains teachers, financial professionals and community members to offer financial literacy classes to teens. The one-day training workshops are free, include lunch and are eligible for Professional Development Points. I’m not sure if any Lowell teachers have taken this on, so in the meantime, here is a good guide for discussing financial habits with your children. As a conversation starter, have them take JumpStart’s Financial Literacy test and then try the Reality Check.