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When you’re a parent shipping a kid off to college, it’s hard not to worry about every possible financial mishap, like is that money meant for textbooks paying for a music festival ticket? But there are ways to ensure students are making the right financial decisions without hovering over them.
Joint bank account
Setting up a joint checking or savings account means parents and students have access to money in the account and can see all transactions.
In addition to tracking account activity online, parents can sign up for text or email alerts when their student’s balance falls below a specified amount, for example, or when large purchases are made.
A joint account offers a bonus, too: Transferring money from a parent’s separate bank account is easy, particularly if all accounts are at the same bank.
Be aware that parents who co-own accounts can be held responsible for overdrawn balances, regardless of who spent the money. Americans ages 18 to 25 incur overdrafts more than any other age group, according to a NerdWallet study, so parents have an incentive to make sure their kids don’t spend more than what’s in the account.
Joint credit card or authorized user
Getting a joint credit card or adding a student as an authorized user on a credit card is another way for parents to keep track of spending, says Winnie Sun, a financial advisor in Irvine, California.
Just as with joint bank accounts, having a joint credit card means a parent can check transactions. Most credit card companies, Sun says, also offer text or email alerts for out-of-the-ordinary activity like big purchases or when balances approach the card’s limit. Parents can ensure their student stays on top of payment due dates, which if missed can bring down the parent’s score.
If these traditional methods of sharing funds don’t fit your needs, financial services companies offer alternatives.
Companies like Greenlight have released reloadable cards that can be used like regular debit cards — but only for stores preapproved by the card’s primary account holder. Parents can make sure the $500 earmarked for textbooks, for example, is spent only at the campus bookstore, says Greenlight CEO Tim Sheehan.
Another company, True Link, offers a similar service and allows account holders to block categories of purchases, such as alcohol, in addition to individual merchants.
Though it could be nerve-wracking watching your student stumble through adulthood for the first time, methods like these will show if he or she can be financially responsible.
“At some point, you’re going to have to release the reins and let them go,” Sun says. “If you raised them properly, you’ve got to trust yourself, too.”