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At this point I have one who just finished college and one who finished his first year in college. This is about what we did so that maybe it'll provide some ideas. In no way is this intended to tell anyone how to deal with their own kids.

Quite a few parts of the financial transition to college for my kids started a long time before that. Very early on(in grade school), we told them that we would pay for 4 years of tuition and room and board at the college of their choice. It could be less than 4 years if we felt that they weren't doing their best. This meant that they knew they would be responsible for books and personal expenses a long time before college. I usually threw out $1,000 a year as a likely possibility for the cost of books.

They also had a $500 CD requirement before getting a driver's license. We paid their insurance(they were expected to qualify for the good student discount) and provided a car. Gas and oil changes(at my required mileage) were on them, major maintenance was on me. The car was ours, not theirs. One consideration on insurance was having kids of both genders – not all that fair to have them pay for insurance. The maintenance and car issues were decided this way partly for safety.

They had jobs early on (http://www.fool.com/fribble/2001/fribble010228.htm ). We put no requirements on what they did with their money other than they knew the expectations above. They each had credit cards with supervised use through high school and then had the cards to use in college. This became almost a necessity over the past 2 years because they each went to a college that necessitated flying and the airlines required you to have the card on which the ticket was charged when you check in.(It looks like United may be changing this now.)

My daughter started getting her own cards around her second year of college. She may have paid interest once for a month when her AFROTC stipend was very late but that would be it. I think hearing about and using the cards when she was home helped. I liked her having the card because if I thought she needed a treat, I would tell her to have dinner on me(this happened a few times during a semester.) She has rebate cards so she gets something back and at the end of college, her TransUnion score was 730. She got positive feedback a couple of times – once when she was setting up cell phone service and the person complimented her on her credit rating. She tended to use our card when needed and promptly sent a check to me when the bill came.

My daughter had a credit union that operated in her high school so she had an account there from about 9th grade on. You had to be 16 to have a checking account so she had one of those when she could. Going to college across the country made this all slightly complicated. We did the traditional “set up checking account at orientation” thing and it ended up being an account with too many fees to make it worthwhile. After a couple of false starts, she ended up with USAA her sophomore year because of the military connection. She still has the account. Internet banks make the whole thing easier now.

She moved off campus her sophomore year. She and I discussed the different options for her room and board money. Monthly ? 10 or 12 month split ? Starting when(because of deposits) ? The other complication was that her college didn't set the rates until about the 3rd week in July for fall. I had been adamant about staying the dorms before she went to college. For a number of reasons, I changed my mind. We got the finances set up. The good thing about doing this was that it really helped her get into a monthly budgeting way of thinking. If she had problems, I didn't hear about it. We also changed another “we would never…” We offered her our oldest car with the proviso that if she took it, it was hers, lock stock and insurance. We actually had an extra car, it was worth almost nothing and I'd rather her have our old decrepit car than one she didn't know.

Sophomore year was an incredible learning experience all around, especially considering she had mono in the fall. It was also a time she figured out that roommates who have the apt heat up when you are paying utilities are a difficult thing to deal with and she made the choice to live alone starting her junior year. Her junior year also brought a raise in her AF stipend which was a good thing and a very long wait for her pay from field training. After a month of waiting, I basically forced a loan on her because I thought it was ridiculous that she was floating a loan to the US gov't. When she got the field training pay, she promptly paid off the loan.

About the choice on AFROTC – she received a 3 year scholarship in high school that was slated to begin her sophomore year of college. The choice to take it was hers and hers alone. She took it because it gave her a monthly stipend and a book allowance. While it didn't cover everything, it did give her some flexibility in how fast her savings was getting spent. When she changed her major, she had a semester without the scholarship and managed to keep herself afloat. I didn't offer help because I, too, had an unexpected bill for tuition.

I asked her what mistakes she thought she made. She said she spent too much on music CDs in high school and should have saved more in general along the way but overall she didn't feel she'd made too many financial mistakes. I would have to agree. One other thing bears mentioning. She went through college knowing that a job at the end was a certainty.

My son handled things somewhat differently – no surprise there but I'll leave that for another post.

rad
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