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Many college students are unprepared for the huge responsibility that comes with financial management. They may not be sure about how to handle the constant bombardment of new credit card offers or the huge amount of student loan payments. If you're a parent getting ready to send your son or daughter off to college, you'll want to be sure to sit them down and go over the basics to ensure they're ready for financial success.

Here are five money conversations for college students.

1. Responsible Use of Credit Cards

While there have been new laws that have changed the marketing rules for college students and credit cards, it's still fairly easy for a student to get a credit card. A U.S. News survey of college student cardholders found that 44 percent of respondents have not been educated by their parents or teachers about important credit card topics. For these students, getting a credit card can have serious effects. This is especially true when students are asked if they want to open a credit card while purchasing clothes or other small items — doing so may eventually impact their credit score.

This is why it's so important for parents to teach their students about using credit cards responsibly. At some point, these students will own at least one credit card and many of them will own more. Knowing how to manage them will help to avoid detrimental financial scenarios. Sit down with your children and discuss some credit card basics such as managing debt, taking advantage of credit card perks, and how to build a healthy credit score.

2. Financial Organization

With student loans, credit card debt, car payments, books, tuition and more, there's a lot for students to juggle. Having a system that ensures everything is paid on time is critical. The last thing any student wants is to miss a car note or credit card payment.

Parents should share their system of budgeting and organization early on. Show your student that putting as many payments on an automatic schedule will help avoid overdue payments and the fees that can come along with them. Ensure that your student's bank account is properly managed to avoid any potential overdraft. The Balance offers advice and a list of several types of budgeting software for students in case parents aren't the most organized.

3. The Importance of a Credit Score

Along with organizing finances, parents need to share the importance of a credit score. Credit not only makes borrowing more expensive, but it could make renting an apartment more difficult. Credit scores impact the rate on loans that are taken out in the future as well.

When discussing financial organization, parents should discuss how missing payments or being late can negatively impact their student's credit score — and how that shows others their level of responsibility.

4. Building an Emergency Fund

Trying to build an emergency fund while in school can seem practically impossible. Achieving this feat is a testament to a student's financial discipline and can mean that they're well on their way to financial success.

Most emergency funds start at $1,000. For a college student, it doesn't need to be that high; $500 to $750 should do fine. The largest expense for a college student is probably their car. If they don't own a car, a $500 emergency fund is a reasonable alternative. It's important to stress that this fund is only for emergencies, not to pay for spring break or a new phone.

An emergency fund is there to prevent you from charging unexpected expenses onto a credit card — thus incurring more debt.

5. Start Investing

Parents should also share the importance of starting to invest early, especially as your new graduate transitions into their first job. Talk about the importance of contributing to a 401(k) plan as soon as they're eligible, and how time in the market is much more important than timing the market. More and more companies are offering a 401(k) plan match and should know enough to not turn away free money.

By teaching them to invest early, you can help set your children up for years of compound interest and potential growth. This could make retirement or other financial goals much easier to achieve!

Leading to a Successful Financial Future

These five money conversations for college students are just the beginning. But having them is key as they can help your college student achieve financial success and at the least, avoid financial ruin.

If you're not sure how to start these conversations, be sure to speak with a financial advisor — they could even join the conversation with you and your student.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on www.Key.com, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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