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4 Finance Lessons for My College-Aged Daughters

Do you know that freshmen’s average credit card debt has jumped 27% since 2004? With soaring college costs, students are increasingly charging expenses to their credit cards. Without any finance lessons — and with new-found independence — these college graduates carry, on average, over $4,000 in credit cards debt without earning even their first paycheck.

My two daughters are attending college this year. Far away from home — Komal at NYU and Niki at Berkeley — they both  are embarking on a new phase in their lives.

Like other college-aged young people, they never had to pay any bills or to balance household budget. I want them to know that it is great to attend a college and to earn a degree but it is equally important to learn how to respect your money as you start earning — to save more and to spend less.

I want to share some of my finance lessons for my daughters, and for any other young people attending college now.

1. Learn to make a simple budget.

As simple as it sounds, learning to make a simple budget sets your finance on the right track. You’ve never driven a car without knowing where you were heading; so, you should never spend a dime without knowing where you are heading financially either. You’ve never had to know how to budget until now. But, that’s not an option anymore. A simple budget will allow you to put your income and expenses on a simple spreadsheet — to prioritize your expenses based on what’s important — with the goal of balancing your income and expense before the month starts. This simple process will make you disciplined and focused when it comes to spending.

2. Never spend more than you earn.

This is the paramount of all finance lessons you will ever need to learn in your life.  If you simply learn — to be frugal with your money — then you will less likely be among one of those students graduating with over $4,000 in credit card debt. Any debt takes away your freedom to think and choose work that you love to do. You will worry about your bills and may end up working for extended hours just to make payments with interest.

Debt is like any other trap, easy enough to get into, but hard enough to get out of.
Henry Wheeler Shaw

You will be feeling increasing pressure to pay for your expenses with credit cards;to pay for things now and pay later when you have money. But, that’s foolhardy’s act as you will dig a hole that’s hard to climb back if you can’t earn enough while focusing on your studies. Be mindful of what you absolutely need without allowing emotions to creep in — to spend only when you have money in the bank.

3. Make commitment to save money.

Your simple budget should start with your goal to save money first. Think as if that money never existed. As you grow your savings, you will overcome situations that are beyond your control. This is your second best finance lesson to learn. If you consider paying taxes on your income and then interest on your debt, you may end up paying 30-50% interest if you spend money that you don’t have. Your savings will be the best friend for you when you need help indeed. It will help you cut those things that you don’t need in the first place. It will prepare you for any rainy days to deal with as you leave college and begin your life in the real-world.

A penny saved is a dollar earned.
Benjamin Franklin

4. Be responsible to pay your bills on time.

Make habit to pay your bills as soon as you receive them. This simple finance lesson will make your life worry free as you will be mindful of your spending habits. We all make mistakes in life. I surely have made my share of mistakes. But, if you make habit to write expenses that you shouldn’t have incurred in the first place — by keeping a ‘DO NOT WANT’ list — you will develop a habit subconsciously to spend your hard-earned money only on the life essential things. Remember, your prime goal is to save first and spend only when you have money to pay for right away — not tomorrow or next month. Try to use cash or debit card only unless it’s an emergency to use your credit card.

You are on your way to become financially smart simply by following these simple finance lessons. Life is more than your money. So, make commitment to not let your money problems ever steal your bright future that awaits you.


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Comments (5)

#2 too is so crucial.
Bad news is that it’s hard to actually keep track of your personal finances balance sheet.
Here is what i found as a solution – discipline and simple accounting. Serves me rather well for more than a decade…

* 3 Easy Steps For Personal Spending Planning
* Money Management Practices That Keep You Out Of Debt
* How To: Create Personal Finances Spreadsheet Using Microsoft Excel


Thanks for sharing these links. These links are all great for young people to learn how to plan a simple budget.


Great advice. Budgeting – and learning to budget – is so important.

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[…] at street smart finance they had an interesting article called “4 Finance Lessons For My College Aged Daughters” While I don’t have any daughters college age or otherwise, I still think that he had […]