All of my four children just rolled their eyes when they read this blog post title. I recently learned that I have some teenage followers of my blog who are about to head off to college. So, in this lull between finishing the college apps and the whirlwind end of senior year, I want to take a few minutes to speak to their financial lives, share our “favorite” quote, and expand on its application.
Lack of sleep makes you fat, sick, and stupid.
Yep, that’s it. If college (and high school) students have one common problem, it’s that. Ten years ago I visited the BodyWorlds exhibit in San Jose, CA with my two oldest children who were then teenagers. Part of that exhibit explored how sleep affects the structure and functioning of the body. After reading and examining all parts of the exhibit, I came away with my now infamous phrase. Listen to your friend Google when you read about all the positive effects of adequate sleep.
Fast forward…let’s give it a new twist!
When I was trying to decide on the best financial message for today’s college-bound students, that darn mom quote kept running through my mind, eventually spawning its new finance-related cousin:
Ignoring financial assets makes you fat, sick, and stupid.
I’m not talking about any complex financial concepts here; basic asset management in these three areas will help you avoid “fat, sick, and stupid” and take you far when you leave the ivy towers of academia for “real life” on your own dime:
1) Use your meal plan to be a healthy eater.
Your parents (in most cases) are paying for it. Learn where to use it on campus to acquire the most nutritious food you can that meets your preferences and dietary needs. Purposefully build in to your schedule how you will eat every meal there that you can. Figure out how you can use those flex dollars to supplement what you have available in your dorm fridge. If you can learn to eat well on the plan, you will avoid the unplanned splurges ($$$) on less nutritious fast food and pizzas (and beers) off campus. Ask any 20-something who is a recent grad about the one thing that most often tanks their post-college budget and many will say “eating and drinking out”. The dining hall gives you the most economical way to learn to eat healthy on a regular basis. Good general health makes you better able to think clearly on those exams, and both good health and clear thinking will only benefit you financially down the road.
2) Learn about your healthcare plan & benefits before you are sick.
Before you leave home this fall, learn and practice how to access healthcare. Your college will require you to have healthcare coverage, and most of you will stay on the plan that mom and/or dad provides to you. Know the name of your insurance company and have the card in your purse or wallet. When you need to get that next physical, make the call yourself for an appointment. Check in on your own. Talk to the doctor and ask your questions. Understand all the details of managing your current health concerns. Learn how to drop off or call in a prescription. Talk to your parent about the things you can address through a campus health clinic vs. your primary care physician vs. concerns that may need to be managed by a specialist. Know what your plan allows in the way of mental health care providers — that part of your health deserves just as much care as your sinuses and your knees. In short, be proactive about your health. It is a lifelong asset over which you have control.
3) Use a credit card — RESPONSIBLY!
You need a credit history. Your student loan interest rates, future auto insurance premiums, utility accounts, cell phone plan, and apartment rental contract will be made easier, and possibly less expensive, if you can build a solid credit history and score before you need those things in life. If your parents have allowed you to be a cardholder on their account, thank them for this privilege. If they have not, this would be a good time to talk about it and then set some rules for when and how it will be used and paid in full each month. If that is not possible, then explore these no-fee card suggestions, or talk to the bank where you currently have checking and savings accounts. Do not open store brand cards such as Gap or Best Buy. These are not considered “high quality” credit lines. You need a standard Visa, MasterCard, American Express, or Discover account.
The key here is to use your credit card responsibly. Charge only necessary purchases that you can afford to pay IN FULL before the due date, even if that is only $10-20/month. You do not need to carry a balance, and you do not need to charge high dollar amounts. PAY ON TIME, EVERY TIME — this pattern of monthly repeated usage and payments is the #1 factor in credit scoring. If you find that you have a problem with overspending and begin to carry a balance, cut up the card, throw it in the trash, but do not cancel the account. Continue making payments until you pay it off and then let it sit there on your credit report. The #2 factor in credit scoring is the length of your credit history. Cancelling an account with a $0 balance is shooting yourself in the foot.
There’s so much to learn besides just the things they will teach you in your major.
Practice adulting in these areas and reap long-term financial life rewards. If you don’t have a trusted adult to turn to on these or other financial topics, please schedule a video chat with me (use the “Friends of TTFP” calendar). I’m happy to help you launch into a successful financial life. And if mom and dad are reading this, let me know if you have any questions, especially regarding healthy use of credit and your young adult.