Kay Robinson: BBB Report

Between packing for college, buying school supplies and recovering from sticker shock, parents may be too bogged down to remember to pass on some financial words of wisdom as their child leaves the nest. To help college-bound students build a foundation of sound financial habits, the Better Business Bureau offers advice for parents to bestow on their freshman.

Last year alone, approximately two million students graduated from high school and headed to college. While most were equipped with bedding and books, many were ill-equipped on the subject of financial literacy. According to a 2007 survey by Charles Schwab, fewer than half of teens considered themselves knowledgeable on how to budget money (41 percent), how to pay bills (34 percent), or how credit card interest and fees work (26 percent).

BBB recommends that before parents wave goodbye to their college-bound students, they sit down and discuss four key rules for managing personal finances:

While having a credit card is an important first step for a college student to start building a credit history, parents need to stress the importance of using credit responsibly. This includes having a minimal number of credit cards, paying off the balances every month and keeping a reign on spending.

For example, if a freshman saves $50 every month and puts it into a high interest savings account or money market account that earns 5 percent interest, by graduation, he will have saved more than $2,660, including dividends. If he continues to save $50 every month at 5 percent interest, in 25 years, he will have saved nearly $15,000 and reaped another $15,000 in dividends.

Aside from the immediate benefits of paying bills on time �specifically, reducing needless spending on fees and interest charges � it is an important way for college students to begin building a healthy credit report.

Kay Robinson is president of the Better Business Bureau of Central East Texas, serving 19 East Texas counties. To contact the BBB in Tyler, call 903-581-5704, and in Longview, call 903-757-3611 or 800-443-0131, or visit the Web site at www.easttexas.bbb.org. The organization can be e-mailed at info@tyler.bbb.org.

Kay Robinson
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