Budgeting and Your College Student
Many students will first handle money without parental supervision during college. To help keep costs down and avoid conflicts, you may want to develop a budget to guide your child’s spending. As you go through the process, consider the following:
- First, consider all potential expenses such as: travel, entertainment, food, clothing, phone calls, periodicals, computer expenses, medical and dental expenses, and insurance.
- Develop a preliminary budget for the first couple of months of college. You may find that you forgot or didn’t think about certain items. After your child has lived on his/her own for a couple of months, you can develop a more realistic budget.
- If your child has trouble staying within the budget or can’t account for large sums, have him/her keep a journal for a couple of weeks that details all expenditures. Go over the journal together to determine how expenses can be reduced.
- Explain the basics of credit cards. Make sure your child doesn’t use a credit card as a means to overspend. Go over which types of items your child can use the credit card for and which items should not be charged. Make sure your child understands that if the balance isn’t paid in full each month, a significant amount of interest will be paid on the outstanding balance. If you teach your child nothing else, try to instill the concept of paying credit card balances in full every month. For a working knowledge of the different types of credit cards available, go to How to Select a Credit Card.
- Consider providing your child with a debit card or Pre-Paid credit card instead of a regular or charge credit card. Since your child’s spending will be limited to the amount on deposit, it is harder to overspend. Or consider a Student Credit Card which is designed for students in college and are great for those who are just starting to build credit. Go to ManagingMoney.com – Credit Card Center
to search for a credit card appropriate for your child’s needs.
- Have your child provide you with a written monthly comparison of his/her actual expenses to budgeted amounts. Or you may want to consider an Online Budgeting System where you both can have online 24/7 access.