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GETTING INTO COLLEGE is a complicated business—and it doesn’t get less so once your teenager is accepted. There are countless financial challenges and discussions related to tuition, ongoing expenses, buying books, transportation and more. For us, all the logistics were a little more involved, because our son decided to attend the University of Pennsylvania, away from our home state of North Carolina.
In addition to the “big stuff,” we wanted to make sure our son was successful managing his everyday finances. There are lots of ways to do this. We decided that we would pay for his tuition, room, board and health insurance directly. But we said early in the process that he would be responsible for his cell phone bill, buying books, his credit-card bills and any other expenses related to his daily living. And, no, we wouldn’t be providing a monthly allowance.
His only solution was an on-campus job, working 10 to 15 hours a week. We figured our son could handle the extra work, but I realize that isn’t true for all students. For many, a job is a plus, but for others it can mean lower grades.
I was pleasantly surprised to discover that all campus jobs were posted on a website, along with a description, rate of pay, hours and location. These became available over the summer. Our son had interviews scheduled the first day he arrived on campus.
With the job process under control, we turned our attention to a bank account. Our son’s school offered two suggestions: a local credit union and PNC, which has branches throughout the Northeast and North Carolina. We decided to go with PNC, rationalizing that it would make it easier to keep an account with one bank throughout college and maybe into the early years of his professional life.
Opening the account was fairly routine. But there was one thing I didn’t anticipate: I had to be a joint owner. The reason: Our son was still 17 at the time. From my perspective, this turned out to be a good thing. Joint ownership gave me the ability to log into his account. I was worried that this might create tension. He might not want us looking over his shoulder, potentially scrutinizing every transaction.
Thirty or 40 years ago, that might have been the case. But our son had no interest in writing checks. He grew up in a credit-card family. As soon as he turned 18, he applied for his own no-fee American Express credit card—and was accepted, in part—I suspect—because of the efforts we’d made to build up his credit history. Thanks to the credit card, the individual items he bought were hidden from us. The only thing we saw on his PNC statement was the monthly card payment.
We also gave him one of our credit cards, on which he was an authorized user. The purpose was a higher credit limit in case of an emergency. But it came with the caveat: He had to pay us for the items he charged before we paid the credit-card company the next month. In four years, he used the card just once.
Joint ownership of his bank account gave me a 10,000-foot view of his account. I could see specific amounts that were credited to his account, like payment for his campus job, and I could see debit amounts, like paying his credit-card bills. I also saw many Venmo credits and debits. This is the way many college students settle bills with each other. It’s quick, easy and free.
We insisted that he set up auto-pay on his credit-card account. On the 18th of each month, his credit-card balance was automatically paid in full. He had to make sure that he had enough money in the bank to pay the bill. Thankfully, he never overdrew his account. By then, he had fully bought into the idea that credit balances, as well as all other bills, must be paid in full each month. At the end of four years at college, he had a $1,600 balance in his PNC account—and no outstanding debts.
Alan Cronk retired after spending 32 years in the newspaper industry as a marketer, editor and writer at the Winston-Salem Journal. This is the sixth in a series of articles about his and his wife’s experience educating their child about money. Alan’s previous articles were Baby Steps, No Laughing Matter, Generating Interest, Getting Carded and No Use.
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Congratulations on a nice job of equipping your son to become an autonomous and competent adult.