By Kevin O’Keefe
As families prepare for the fall 2025 semester, one persistent challenge looms large: helping teens achieve financial independence without falling into the student debt trap.
Young adults leave home learning to manage class schedules, meet deadlines, work part-time, and develop basic money management skills. This period can significantly affect future credit opportunities and the capacity to enter the workforce without accumulating credit card debt.
My Independent Bank branch is located near 20 colleges and universities, and we see this phase of life as a significant financial milestone for students. Taking steps now in the months leading up to the start of school can boost confidence.
Build a Foundation of Financial Literacy
Before students leave home, review the basics of creating and maintaining a budget, which may change each month. A teenager’s budget is usually simple, so it’s good to practice budgeting before their spending and income become more complex. Discuss the difference between needs and wants, separating student loans, housing, tuition, books, utilities, and meals from the extras. Determine who will be responsible for covering the costs of athletic events, spring break, gas, or emergencies.
Some universities and extension programs offer financial wellness courses or resources to help individuals calculate their monthly expenses. Students should also develop the habit of regularly monitoring their transactions and credit card activities. Checking accounts at least once weekly can help prevent overdrafts and quickly identify discrepancies.
Now is also a good time to set savings goals, whether for a vehicle, trip, or post-graduation readiness. Even putting aside $100 per month can make a big difference. You may even consider an Individual Retirement Account (IRA) to keep some savings out of reach.
Navigate the Campus and Banking Landscape
Will the student establish their own bank accounts and cards or share access with their family? If they manage their accounts, consider visiting the community bank together to learn about the available resources. Independent Bank, an FDIC Member, operates nearly 60 branches throughout Michigan.
Credit card marketing rules have evolved since parents went to college. Companies can no longer provide gifts to students in exchange for signing up. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 stipulates that anyone under 21 cannot obtain a credit card without a co-signer or proof of income.
Despite this, a recent U.S. News & World Report survey finds 52.7% of college students have a credit card, and over 42% carry debt. Over a quarter of students (28.2%) have racked up $2,000 or more. Unplanned expenses, such as dining and shopping (24.2%) and other impulsive purchases (21.8%), are among the most common drivers of debt.
Many teens have the misconception that credit cards are free money. They should understand that when using a credit card, it’s essential to pay off the balance at the end of the month; otherwise, they’ll incur interest, which means they’ll end up paying more for the items they purchased on credit. Teens who grasp the concepts of interest, billing cycles, and payment responsibilities can avoid the costly pitfalls of revolving debt. This also includes the implications of buy now, pay later offers.
Protect Money While Away from Home
Fraud and identity theft are growing concerns, especially for college students. Living in shared spaces, relying on public Wi-Fi, and juggling a mix of digital and paper documents can increase their risk.
Students should avoid accessing banking or financial accounts over public Wi-Fi networks, including those in coffee shops and airports. They should also never share personal information such as login credentials, account numbers, or Social Security numbers through email or unsecured platforms. Finally, they should avoid using the same password across multiple accounts and change their passwords frequently.
Physical security matters too. Important documents should be stored securely, and mail should be collected regularly to avoid sensitive information falling into the wrong hands. One easy step toward achieving peace of mind is to review your credit report annually from Experian, Equifax, or TransUnion to check for unfamiliar accounts or activity. This can be done for free through AnnualCreditReport.com.
Of course, even with the best preparation, mistakes can happen. Students should know how to respond if they suspect fraud or lose a debit or credit card. That means contacting their bank immediately, freezing or canceling compromised accounts, and reporting suspected identity theft to the Federal Trade Commission at IdentityTheft.gov. Knowing how to act quickly can make all the difference in minimizing damage and recovering from an incident.
Financial literacy isn’t always part of the college curriculum, but it should be. By learning how to manage their finances, build credit, and protect themselves against fraud, students can set themselves up for long-term success. These lessons don’t just help during school; they become the foundation for financial independence in adulthood.
About the Author
Kevin O’Keefe is an AVP, Bank Manager for Independent Bank in Holland, Michigan. He has over 20 years of experience in the financial services industry. Kevin is actively involved in the Michigan West Coast Chamber of Commerce, the United Way Community Investment Panel, and local nonprofits.