5 Tips for Budgeting for a Child in College
Let’s face it—college is expensive. More than student loans and housing, students are living away from their parents for the first time and often still relying on financial support from home. If you’re a parent of a college student, helping to shoulder the financial burden while simultaneously holding down your own can be a tall order. Thankfully, there are budgeting options that can help you manage your joint finances without breaking the bank.
Check out our top five tips for budgeting for your college student.
Set Spending Limits
College students are young and often inexperienced with finances. Because of this, they will often take out credit cards, run up the balance and make the minimum monthly payment. This practice can set a bad precedent for their spending habits going forward. Before students go off to college, make sure to talk to them about setting spending limits, so they know what they can and cannot afford when they are on their own at school.
Set a Budget Together
Budgeting is a rare skill in high-school-aged students, but it is one that is completely necessary during their college years. Work with your student to put together a spreadsheet of his or her expected sources of income and expected monthly expenses to get an idea of the overall financial picture, as well as opportunities to save money.
While some families may be able to fully support their college students while they are away at school, this can be a dangerous practice when it comes to financial planning. College is a time for students to grow in their financial independence, and it’s better if they have some skin in the game. If you can afford it, offer your student a monthly allowance under the condition that he or she gets a part-time job to pay for some of the other expenses. This removes some of the stress from the student’s shoulders while simultaneously teaching money-management skills.
It may sound silly, but food becomes a major budget item for students during their time away at college. If they lack the culinary skills to cook for themselves, then eating out becomes a regular, but expensive, occurrence. To combat this, go grocery shopping with your students, and teach them a handful of inexpensive but delicious meals that they can use to nourish themselves while they’re away from home. This is a skill that they will carry with them well beyond their college years and one that will help to ease the financial pain associated with the college experience.
Prepare for Hiccups
At the end of the day, it’s best to have money saved away for unplanned and emergency situations—which are inevitable when it comes to the unpredictable world of college finances. We recommend having two to three months of your college student’s expenses available in your savings account. These savings will serve as a buffer that protects you and your student from further financial issues that can be brought about by unexpected expenses.
Regardless of your recipe for financial success, you’re sure to find an option that works for both you and your future college student. The best thing you can do is monitor your finances closely and save money wherever you can. Thankfully, your children’s college years are temporary and, by following these tips during their schooling, they’ll be all the more prepared to take on their finances after graduation.