Financial Survival Skills for Your College Bound Kid

Every summer, a new crop of students graduate from high school, and their parents get ready to release them into the wild. Many of these students are planning to continue their schooling, so their parents dutifully teach them a number of useful survival skills—completing financial aid applications, choosing a school, doing their own laundry, and other important things they need to know to survive in the wilderness of college.

While these skills are vital, the financial skills necessary for survival tend to be neglected. Financial survival skills should be at the top of the list—right up there with learning how to do laundry and how to cook. If you ignore teaching your children financial skills, it could make their first years after high school pretty rough, and have financial consequences that could last well into their adulthood. Add the following financial skills to your list of things to teach your children before they leave the nest.

Budgeting. Very few families talk about money. Many people think money management is a skill our children will naturally pick up on their own. Take it from me, it isn’t. We learn how to manage our money either through education and positive role models, or we learn through making mistakes. And some money mistakes can take years to recover from.

Basic money management for your soon-to-be college student means creating a budget based on realistic expenses, and setting limits on discretionary expenses like pizza and beer, I mean soda. To be successful, fledglings have to understand the difference between wants and needs. As you help your child prepare a budget, include putting money into a savings fund for emergencies; you never know when their 1998 Toyota Corolla will need some fixing.

The key word here is that you are “helping” them create a budget—not doing it and handing it over. It is imperative they have a big hand in creating their budget, because they’ll be the ones having to follow it once they have flown the coop.

Credit. Most college bound kids have no understanding of credit. They learn a little about it from the example set by their parents, but still don’t have much of a grasp on how it works and why it is important. They absolutely need to know how credit works and why it is essential to use it wisely.

Sit down with your child and talk about how to use credit properly. If you don’t understand credit and credit reports yourself, consider taking your child with you to visit a credit counselor to learn more. As a credit counselor myself, I would love to be able to say, “Don’t use credit!” But the truth of it is, if you want to be able to take out loans to buy things like cars or homes later on in life, you have to start using credit now in order to build that credit report. If your son or daughter can be trusted with one, consider opening a joint credit card. By beginning to build a positive history of credit use now, your child will be in a much better position after college, as far as their credit report is concerned.

Student Loans. This is a tricky one. Parents and university financial aid officers often caution prospective students to keep their student loans to a minimum. However, if you have neglected to teach your child about budgeting, how will they be able to figure out how much money they need to make it through the college year?

I, not being a very wise kid, took out the maximum student loan amounts because I had no idea how much money I would need to get me through the semester. I figured it was better to have enough to get me through rather than coming up short. I was wrong. I wish I had listened to the advice I had been given so I didn’t have to spend 20 years paying back student loans.

Teach your young ones some of these financial survival skills before you kick them out of the nest. The lessons won’t all stick and your children will make mistakes, but your initial guidance and encouragement will give them a good head start in their struggle for survival.


Credit Myth of the Day

Closing the credit cards that you don’t use will help boost your score…False!

It is a common myth that closing unused credit card accounts will be good for your credit score. In fact, it will actually hurt your credit score. It can negatively affect your credit score in two ways.

1. A large chunk of your credit score is determined by your utilization ratio. This ratio is created by comparing your credit in use to your available credit. Simply put, if you had only 1 credit card with a $1000 limit and you had a balance on the card of $900, your would be using 90% of your available credit. The closer you get to maxing out your cards and using a large percentage of your available credit, your credit score would be negatively impacted. For the sake of the credit score, it is best to keep your balances as low as possible.

When you close unused credit cards, you eliminate available credit. By eliminating available credit, you would likely increase your utilization ratio and negatively affect your credit score.

2. Another factor in determining your credit score is the history of your accounts. 3 years of history on a credit card gives a better idea of how you pay your bills than 3 months will. Because of this, the longer your history the better your score will be. When you close credit card accounts, you will eliminate this history. If you really are uncomfortable keeping unused credit card accounts open, close the accounts you have had for the least amount of time keep open the accounts you have had for a number of years.

Credit Myth of the Day


Bad Credit is Better than No Credit…False!

This is a common myth. If you have bad credit, you may have a lot of work to do cleaning up past due accounts and collections before you can start to rebuild. Depending on just how bad your credit is, you will likely be turned down for loans and other credit products.

If you have no credit, there are ways to establish it. Some lenders can even create a credit report for you. They can create a non-traditional credit history by using the payment history of things that aren’t typically reported on a credit report like rent, utility, phone bills, etc. This can be pretty useful when applying for a home or car loan if you have no credit history. A non-traditional credit report is not an option for someone with bad credit.

Do you have questions on how to rebuild from bad credit or how to establish credit when you have none? Just ask below in the comment box!

How do you save money?

I heard a story the other day about a family that managed to save $12,000 in 3 years by saving $5 dollar bills every time they received one as change. If you think about it, that’s pretty impressive. It got me thinking about other creative ways people have of saving money.

There is the old standby of simply taking any coinage you receive as change from a purchase and putting it in a jar; which is basically the same concept as the $5 bill method. That method was obviously effective for one family; but in this digital age, cash is being used less and less.

Another creative way of saving money (without using cash) is to keep a log of all debit card or check purchases rounding the amount up to the nearest dollar. Then at the end of the month, you reconcile your log with your bank statements (using the actual dollar amount of the purchases) and put all the remaining ‘change’ into a savings account. Some banks will actually do this for you.

Some people find the best way to save money is to cut a ‘luxury’ from their normal monthly budget and save the money they normally would have spent on themselves. I have seen it work with people cutting out coffee, soda, tobacco, etc.

The key to any great creative method of saving money really is to begin with a goal in mind. Without a goal, your willpower won’t last that long. Studies have actually been done that prove how effective having a goal can be. And don’t ask me why, but apparently, those that write their goals down have even more willpower than those that just thought up the goal but didn’t write it down. It’s science and I am not going to argue with science.

So, what’s your creative way of saving money?

6 common-sense ways to deal with money problems

By Joshua Huffman
The Village Financial Resource Center

There are a lot of people out there that are under the impression that there is a top secret super solution to solving money problems. Some think that if they could just discover this secret, it would solve all money problems and put them on the road to riches. People often spend lots of money searching for this secret, either through buying books that promise riches or signing up with scam companies that say they can settle your debts for 50 percent of what is owed. Often people are searching for a secret solution in all the wrong places.

If you are struggling with money problems, there really is no one super solution. There is no magic wand that can make the problems disappear. The answer to most money problems is a lot more basic than you might think and there are steps that everyone can take to get back on the right track.

1. Create a Comprehensive Budget – write down all of your expenses and compare the total to your monthly take-home pay. This is the first step in identifying what options might be best to solve your money problems.

2. Track Expenses – keep track of your expenses by writing down every single dollar that you spend. Categorize the expenses and at the end of the month review the budget you first created using the newly tracked figures to identify how accurate it really was. If you have never tracked your expenses before, you may find yourself shocked at where the money really was being spent. Knowing where your money is going is one of the most important parts of managing your money; it’s only when you know where the money is going that you can truly begin to make changes and plan for future goals.

3. Prioritize Expenses – If you are running short of funds every month and don’t have enough money to pay all your bills, you have to make some tough decisions on what will get paid and what won’t. Be sure to make a list of priorities; housing, transportation, food and utilities should be on the top of your list.

4. Decrease Expenses – Again, fixing a broken down budget comes down to a few basics. If you don’t have enough money to cover all of your expenses, this is a necessary step. Review your monthly expenses and see where things can be trimmed or cut. Now, I am not talking about simply cutting cable (although cutting or reducing this is something to consider). To truly cut expenses you absolutely have to know where all of your money is going. This is where tracking comes in. By tracking your expenses, you can begin to identify what areas of your budget are unnecessary or excessive. There are many expenses that can be reduced in most of our budgets. You can reduce your cell phone plan, grocery shop smarter, use coupons, cut down on driving, eat out less – pack a lunch for work, find cheaper entertainment, raise your insurance deductible, shop for lower insurance rates, etc.

5. Increase Income – It’s another very basic concept. If you don’t have enough money for all of your expenses, you need to either reduce the expenses or increase your income; a combination of both can work wonders. Look for any and all ways you can increase your income. It can be as drastic as finding a new full time job with higher pay or as simple as picking up a small part time job. But new employment isn’t the only way to increase income. You can try other things like donating plasma. You can get as much as $70 per week for just a few hours of being hooked up to a machine. It doesn’t hurt and it is a great way to knock books off of your must read list.

6. Get Help – If you are struggling to do this on your own, get help! Just make sure you are working with a reputable company that is truly there to help you achieve you goals and not to line their pockets.

These are just a few of the simple steps you can take to get out of financial problems. There is no magic wand when dealing with money problems. It usually comes down to making some tough decisions, making some sacrifices and most importantly disciplining yourself to follow through on your plans.

Joshua Huffman, The Village Financial Resource Center

 About the author
Joshua Huffman is an NFCC certified financial professional with The Village Financial Service Center.

Should You File Taxes Yourself?

During the first couple months of every year, I am frequently asked, “Where should I go to get my taxes done?” And I usually respond with the question, “Have you tried filing your return on your own?”

For those that haven’t tried filing their taxes on their own, it can be rather intimidating. Growing up watching the process my parents went through to file taxes made me think it would always be best to pay someone else to do it.

I remember tax days well. My parents would sit down at the kitchen table together for hours with a massive amount of paperwork. My 3 siblings and I always knew that tax day was the 1 day of the year that we had better be on our best behavior. In fact, we made a point to lay low and be as invisible as possible. None of us wanted to be the one that laid the last piece of straw on our dad’s back.

But, being the cheap person that I am, I decided to save some money and file taxes on my own, even having seen myself how frustrating it could be for my parents. With a number of years under my belt, I am quite comfortable filing taxes myself now and I actually look forward to it. There are a number of great computer programs out there that make the process very simple and fairly idiot proof (which is very important in my case). It a shame my dad never lived long enough to experience electronic tax filing. He would’ve experienced a whole lot less stress with today’s process.

The IRS has a great website ( that can help to answer most tax questions. Most individuals can file their federal taxes for free using the tools available on their site. It can be a very simple process that takes me an hour at most. I just grab my tax documents (w-2, previous years taxes, student loan interest statements, etc.) and plug in the numbers that the program asks for.

Now, that being said, there are definitely times when it’s a good idea to get professional help. If your tax situation is particularly complex or if you are very concerned about not doing it right, by all means, hire a professional. But, if you have never tried it on your own, why not give it a shot?

What I really love about the tax programs available through the IRS is that you can fill in all of your information, review the results and then choose whether or not you wish to file them. If you are really nervous about going it on your own and feel that you really need a tax professional to do them, I would suggest you do just that. But before you have a professional file your taxes, go through the process yourself online without actually submitting your tax filing. That way, you can compare the results of your efforts on your own and those that were done professionally. If the results were the same, then go ahead a try it on your own next year and save yourself some money in the process.

However you choose to file your taxes, with just 3 weeks before the deadline, if you haven’t already taken care of it, you had best get on it.

Joshua Huffman, The Village Financial Resource Center

Joshua Huffman is an NFCC certified financial professional with The Village Financial Service Center.