IMPORTANT TO-DO’S BEFORE SENDING YOUR CHILD OFF TO COLLEGE
The day has come. Your little baby has grown up and is now ready to leave the nest. He or she has graduated high school and the next big step is awaiting. Whether it’s college, a gap year, a year abroad or any other life adventure lies ahead, this time can be filled with much emotion for you and your child.
As departure day gets closer, you’re probably focusing on last-minute shopping lists and feeling overwhelmed with trying to get everything done in time. Of course, you have already visited Walmart, Target and IKEA for the dorm room basics, purchased the new computer (yes, that is a 529 College Savings Plan qualified expense), figured out the move-in logistics, and coordinated with the roommate about who will bring what.
Congratulations, you are well on your way. However, you might not be finished just yet. The following are six important tasks you may have overlooked.
1. Make an appointment with your attorney to create a durable power of attorney document for financial matters and a health-care proxy.
Without them, in most states, you, as a parent, don’t have authority to make health-care decisions or manage money for your children once they turn 18. That’s true even if you are paying the tuition, have your child on your health insurance plans, or claim your child as a dependent on your tax returns. Without such documents in place, if your child is in an accident and/or becomes disabled, even if only temporarily, you might need court approval to act on your child’s behalf.
2. Establish a monthly budget for your child.
The precise amount agreed upon in said budget is a personal discussion. However, it is especially important to set clear expectations about who will pay for what expense. Maybe you agree to pay for all school-related expenses and it’s your child’s responsibility to pay for all or some of the social expenses. Don’t spring this conversation on your child as you arrive on campus. Discuss it early enough to allow your student time to find a good summer job to earn and save money for the upcoming year.
3. Determine whether your child will receive a credit or debit card and set rules around when to use each.
Educate your child on the difference between the two and, based upon your child, decide which is the better option. There are advantages and disadvantages with both. If your child is just starting to learn how to budget and balance a checkbook, beginning with a debit card may be best, especially for general daily expenses. Leave the credit card for larger expenses, such as travel arrangements and emergencies.
Two important benefits of using a credit card are the ability to create a credit history and its better security. Building a credit history can work two ways — you can create a positive credit record or a negative one — so it’s imperative you educate your child on the proper way to use a credit card. Pay off the balance every month, don’t overspend, don’t assume mom and/or dad will bail you out every time, and understand how interest charges and late fees add up and are cumulative. Frank Abagnale, of “Catch Me If You Can” fame, explains that consumer protection law treats debit and credit cards very differently. Under federal law, your personal liability for fraudulent charges on a credit card might not exceed $50. But, if a fraudster uses your debit card, a direct line to your bank account, you could be liable for $500 or more, depending on how quickly you report it.
Some simple steps you, as a parent, can take:
· Co-sign on the card.
· Start with a low credit limit.
· Ensure you have online access to the card.
Get ahead of the onslaught of credit card solicitations your student will receive. Advise your child simply to ignore and discard them.
In just a few years, your child will begin life fully on his or her own. Your child will need to sign an apartment lease and perhaps buy a car. While you can and will probably need to co-sign, how much better will your child feel if he or she already has established some positive credit history?
4. Once on campus, make sure you and your child know where the closest hospital, urgent care and 24-hour pharmacy are located.
Ask your regular doctor or a trusted family member or friend familiar with the school or town if they know a good physician in case your child needs medical attention above what the college health center can provide. Make sure your child carries his or her health insurance card and you have reached an agreed-upon way to pay for any medical expenses. Does your child know when to use the credit card versus the flexible spending or health savings account (HSA) card? Remember to pack your child a simple medical kit with the essentials (bandages, anti-bacterial cream, cold and flu medicine, etc.).
5. Have your child write down passwords to any digital profiles, including financial and social media accounts.
Keep this in a safe place at home. Your child may not like this, but explain that you are not doing it to invade privacy, but to protect it in case of an emergency. I recommend you review this list with your child before each new school year in case any passwords have changed. On a related but separate note, have you and your spouse shared this information between yourselves? You probably should.
6. Ask your insurance agent about covering your child’s belongings while living on or off campus.
The premiums associated with a dorm insurance policy or a renter’s insurance policy vary, but affordable options generally are available. Make sure the coverage amount and deductible of any policy you consider are appropriate for your and your child’s specific circumstances.
While my list of must-do items can help ensure you meet certain financial and other important needs before the first day of new student orientation, don’t let prioritizing the emotional aspect of dropping off your child at college for the first time get lost in the commotion. Indeed, this event can be a special opportunity to connect with your child.
Marshall Duke, a professor at Emory University, offers some wonderful advice on this topic. He writes: “It is a moment that comes along once in a lifetime. Each child only starts college once. … Such moments are rare. They have power. They give us as parents one-time opportunities to say things to our children that will stick with them not only because of what is said, but because of when it is said.
“Here is what I tell the parents: think of what you want to tell your children when you finally take leave of them and they go off to their dorm and the beginning of their new chapter in life and you set out for the slightly emptier house that you will now live in. What thoughts, feelings and advice do you want to stick? ‘Always make your bed!‘? ‘Don’t wear your hair that way!‘? Surely not. This is a moment to tell them the big things. Things you feel about them as children, as people. Wise things. Things that have guided you in your life. Ways that you hope they will live. Ways that you hope they will be. Big things. Life-level things.”
Duke suggests writing your child a special note, starting it with something like, “When I left you at the campus today, I could not tell you what I wanted to say, so I’ve written it all down.” Mail it, the old-fashioned way. He writes: “It will not be deleted; it will not be tossed away; it will be kept. Its message will stick. Always.”
It may take time for you and your child to adjust to this new stage of life. At the beginning, it may help to think of your child as a high school student now in college. Your child will need to learn how to become a college student — how to study, how to eat, how to handle money — and thrive amid the greater independence. So don’t be too hard on your student. This is a time to experience new things, and remember that your child will learn many of the most important lessons to prepare for life ahead outside of the classroom.
Ken Rosenbaum is a wealth advisor in the BAM ALLIANCE.
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