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Originally published Saturday, August 11, 2012 at 8:01 PM

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Frank talk about money: a rite of passage for college

With college students starting to leaving home for the first time, financial experts say keeping a lid on costs begins with a conversation — and the approach is critical.

The Sacramento Bee

College money tips for students

Dull as it sounds, make a budget. Use an online student-budget calculator, such as bankrate.com or cashcourse.org. Add up your monthly income, whether it's from parents, loans or jobs. Write down everything you expect to spend. Subtract your expenses from your income. If you end up short on funds, a budget lets you decide where to cut back. Use it as a starting point, adjusting as you go through the school year.

Do your homework. When opening any new bank or credit-union account, check the fine print for fees or charges. Be aware of overdraft options. Always shop around for the best rates.

If using an ATM card, don't pop it out at every stop. Instead, withdraw a set amount of cash each week for spending. When it's gone, close the wallet.

Don't forget "payment due" dates for bills. Sign up for email reminders or write dates on a calendar.

If using a credit card, always pay off your monthly bill. Otherwise, you risk late-payment fees, plus the start of a lousy credit rating. Don't use credit cards for cash advances, which can trigger costly fees.

10 things college students don't need

Kiplinger's financial magazine offers its back-to-college list of items that students can live without. Here are some items from the 2010 list:

1. New textbooks. Buy used or rent your textbooks from the campus bookstore or websites like CampusBookRentals.com or Chegg.com. Compare shipping, return policies. For used books, try sites like BigWords.com or CampusBooks.com.

2. A high-end computer. Whether laptop or desktop, an inexpensive computer or netbook can suffice.

3. A printer. Not all students agree, but you can save $80 or more for a printer, ink cartridges and paper. Instead, use the campus-computer lab. Check first on fees, page limits, etc.

4. A smartphone. Students may think an iPhone or Droid X is a necessity, but data plans can run as high as $200 a month.

5. A car. The cost of gas, maintenance, insurance and unexpected breakdowns or parking tickets adds up. Keeping the car at home lowers insurance premiums, too.

6. A credit card. Avoid the debt trap; a debit card is a good alternative to get started handling monthly spending.

7. Hefty bank fees. Be sure your student's bank account allows ATM withdrawals that don't require an out-of-network fee. Or consider an online-checking account with a bank that refunds ATM charges. Check on fees for transferring funds online to your student.

8. Overdraft protection. If you opt out of overdraft protection, the bank either will not permit you to withdraw funds if your balance is too low or ask if you want to pay a $25-$35 fee to let you proceed.

9. Big-meal deals. Avoid loading a meal account with enough money to feed the football team. Some schools have a use-it-or-lose-it system; start low to see how much your student needs.

10. Campus-health insurance. If your family-health plan does not cover out-of-network costs, a campus-health plan may be cost-effective. Some schools require them, but let you opt out. If the school policy has low maximums, you could get left with thousands in uninsured expenses.

For the complete list, go to: www.kiplinger.com

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T his month, as thousands of college students start leaving home for the first time, financial experts say keeping a lid on costs begins with a conversation.

And the approach is critical.

"It's a conversation, not a lecture," said Geoff Howard, a financial consultant with the Charles Schwab office in Roseville, Calif. Make it collaborative but focus on key points, he suggests. Among them:

• Talk about needs versus wants: Needs are textbooks, tuition. Wants are snowboarding trips and the newest iPhone.

• Decide who pays for what. It's personal to every family, but everyone should be clear so there are no bank-account surprises midyear.

• Drill down to specifics on expenses. Use a budget worksheet; many universities offer them online through their financial-aid office, or go to websites such as bankrate.com/">www.bankrate.com or cashcourse.org.

"It's an eye-opener and, if done right, can be the first real conversation parents have with their children about money," said Howard. "It's a chance to start good habits right now."

For any college-bound student, here are other money matters to consider:

File it away

Creating a financial-filing system is a must. Websites like Mint.com let you create a budget and a financial record-keeping system. Or simply label a series of file folders: bank account, ATM receipts, bills, cellphone contract, health care.

When you need the paperwork, it's not buried under a pile of books or gym socks.

Credit cards

Maybe: College students and credit cards have long been a hot topic. Eager to clamp down on aggressive soliciting by credit-card companies on college campuses, Congress this year banned anyone under 21 from obtaining a credit card, unless there's a co-signer or the student can show his or her ability to make monthly payments.

If you're willing to co-sign and you feel your student is responsible, it can be a great way to launch their credit history while they're still under your financial wing. And a credit card can be a lifesaver in an emergency — the unexpected-flight-home type, not the late-night-pizza-run kind.

But a warning: If you co-sign and your adorable teen racks up too many overdrafts or late payments, your credit history can be dinged. And vice versa: Your bad habits could hurt your child's credit history.

Another option: prepaid, reloadable cards. They're like a credit card, but you can't overdraft or spend beyond your limit. Companies like American Express, Visa and MasterCard offer them. Compare several to check fees or restrictions, such as out-of-network ATM withdrawals.

Just-in-case documents

It's the scenario no parent wants to envision, but your son or daughter may want to consider authorizing someone to make financial and health-care decisions on their behalf, in the event of an accident or hospitalization.

For students 18 and older, Sacramento estate-planning attorney Trudy Nearn recommends three documents: a financial power of attorney, an Advance Healthcare Directive and the medical-records release form known as HIPAA. The health-care directive states who can make medical decisions on your behalf; the HIPAA form says your medical records can be shared with whomever you designate.

The financial power of attorney would give a parent or other designee permission to make or postpone loan payments, talk with lenders and landlords or access bank accounts, if a student is incapacitated.

"It's just peace of mind for parents that they will be able to help their kids and be involved if something happens," said Nearn.

In most cases, she said, students designate a parent, but siblings, grandparents and family friends also can be named.

Leaving home for college is a life-changing event for kids and their parents. Doing a little financial prep can be healthy for everyone.

"You love your kids, and while they're at college, you want to minimize their stress and distraction like a late bill or a bounced check," said Schwab's Howard. "Those are what will keep kids from focusing on their academic and their personal development, which is what college is all about."

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