How Parents Can Set a Budget for College StudentsAugust 5, 2013 in Saving & Spending
Sending children off to college is expensive. There's tuition, room and board, books and supplies, and don't forget spending money! Establishing a budget for college students can be tricky because it's hard to know how much they are going to need, and it can vary widely. If you establish a good plan for spending money now, it can help set your student on a good path for future financial responsibility.
I was a late bloomer when it came to financial responsibility. When I went off to college many years ago, my mom figured that the best way to cover my spending money was to let me have a credit card. The bills would be sent to the house and she would pay them. I was not given an acceptable range to spend every month, so guess what I did? I spent whatever I wanted!
When I needed cash, it was easy. My friends and I would go out to eat, I would pick up the whole tab on the credit card, and they would give me cash!
My mom didn't actually set up a budget system for me. What she did was give me a source of spending money with no accountability for how much I spent. This was definitely the wrong way and taught me nothing about being responsible with money.
As I got older, I learned the importance of getting on a budget and sticking with it. Establishing a budget for college students is much easier than trying to break bad money habits later! Some of the ways we are teaching our daughter include:
- Expecting her to use her earnings from her on-campus job to cover her spending money.
- Helping her think through a budget. We looked at how much she expects to earn each month after taxes, how much she will need for monthly supplies like shampoo, soap, and toothpaste, and how much will be left for discretionary spending.
- Sitting down with her to explain how the college bill will get paid every semester — this much from college savings, this much from Mom and Dad's cash flow every month, this much from her summer earnings, etc.
- Setting up a plan for emergency spending. She will only have a debit card. If she has an unanticipated expense, we have online access to instantly transfer money from our bank account to hers.
Putting together a similar plan for your college students will help teach them how to handle spending money and put them on the road to future financial success.
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