Your student is heading off to college in the next week or two.  They (or you) have money put aside for their first semester or full year of college and you just might be thinking that their finances are all set.  Well, you might be right. Or there might be more planning to do.

According to this article by U.S. News it is important for students and parents to begin or continue discussions about personal finance, planning ahead and  how to create and stick to a budget.  I think many of us know that we should be having these conversations, and we often have the best of intentions, but that doesn’t mean they always happen.  Here are some tips to help you prepare your college student to handle their finances while away from home.

Let’s say your student worked really hard over the summer and was able to stash away a couple of thousand to spend over the course of the year on incidentals like pizza, laundry, clothing, etc.  A couple of thousand sounds like a lot of money (and it is!), but it won’t last forever if they spend $20 on pizza every night.  Create a working budget for discretionary items like pizza as well as set aside emergency funds such as medicine or co-payments for doctor visits.  Agree on spending limits per week or month.  You may find that one month they went a little over-budget, and that’s okay as long as they balance it out the next month by coming in under-budget.

There are temptations everywhere.  Who can resist a shopping trip to the mall with friends?  It won’t hurt their budget if they just buy a couple of things right?  All of their friends go out to eat at least twice a week; that’s reasonable, right?  Maybe it is, and maybe it isn’t.  That depends on the amount of money they (and you) realistically have set aside for these types of expenses.  Some students turn to credit cards when they are unable to pay for items out-of-pocket.  Discuss the pitfalls of paying for incidentals like eating out and the latest fashions on a credit card unless they are able to pay the balance in full each month. 

Learning to balance their finances now will serve them well when they enter the workforce and have to manage rent or a mortgage, a car payment, buying groceries, paying for gas or other transportation to get back and forth to work, etc.  While most of their thoughts right now should be focused on choosing classes, finding their way around campus and acclimating themselves to their college, spend a little time working out a realistic budget with them.  It will help them stay on track as they begin their college career.

Until next time,
Val