Budgeting With Your College Student

When students go off to college, we worry about many things. These include: how will they do academically? Will they make friends? and, will they be homesick? But another consideration is will they run out of money, or will they manage their money correctly? As a parent, you can play a vital role in helping your college student develop smart money management and budgeting habits that will benefit them throughout their lives.

Start the Conversation Early

For all but a few of us, college is extraordinarily expensive, and a significant family investment. As early as possible, be clear with your student about financial expectations, but also provide them with specific tools, and numbers to think about. Tell them, for example, how much spending money you’ll provide them.  Anything beyond that will have to come from them.

Create a Budget Together

The first step in managing money is often creating a budget—with them, not for them. The budget will help them keep track of their expenses, and give them a reality check when they overspend. Collaborate with your child to create a budget that accounts for all their income and expenses, including tuition, fees, housing, books, and living expenses. By guiding them through the process, you can teach them how to make informed financial decisions and prioritize their spending. But remember that things will come up: a late night pizza run may not be in the budget, but doesn’t hurt in the short run. One objective of budgeting is to identify where students have flexibility for the occasional splurge. And those pizza runs—in moderation—are one way students make connections with other students, an important part of college.

 

 

Smart Spending

Beyond pizza runs, there are other ways students spend money. One example is fancy coffee drinks. The occasional $5.00 coffee is okay, but it’s far too easy for students to get into the habit of hitting the coffee shop on campus multiple times per day. And those coffees can add up quickly.

At the same time, give your student license to purchase important academic materials they didn’t know about beforehand. Some courses may offer students optional materials or study guides, beyond the required course materials. If your student chooses to purchase one of those—even beyond the budget—they’re likely making a wise academic decision. Remember that the budget is ultimately to support their success in college, and these additional materials will help them do that.

Never Underestimate the Power of Student Discounts

Businesses within college towns offer all kinds of student discounts. Encourage your student to always carry their student ID consistently and to inquire about student discounts when shopping, dining out, or attending events. Many students miss out on these deals simply because they don’t ask for them. Online platforms like UNiDAYS and Student Beans can also provide access to exclusive deals for students. Encouraging your student to take advantage of these opportunities helps them become smart consumers.

Consider a Budgeting App

There are several budgeting apps available to college students. These apps can help student track both income and expenses, and pay bills. While there are several on the market, I’d recommend downloading one that’s free at first. The free versions may not contain all of the app features, but it’s enough to get started. Another great advantage of these apps is they allow your student to manage their budget from their phone, making it more likely they’ll use the apps. Common budgeting apps include Mint, EveryDollar, YNAB (You Need a Budget), and Goodbudget. These apps consolidate financial information and offer insights into spending habits, which can help your student make better financial choices.

Promote Wise Uses of Credit and Debit Cards

Credit and debit cards are valuable tools for students, who have grown up in a minimal-cash society. Teach them how to use these cards responsibly. And if they don’t have any yet, help them choose cards with low-interest rates and no annual fees. I also recommend having a monthly finance meeting with your student to discuss spending and upcoming expenses so you have a regular dialogue about money.

As a parent, you play an essential role in helping your college student develop healthy financial habits. By creating a budget together, encouraging smart spending, finding student discounts, teaching responsible credit card use, setting up automatic savings, and tracking spending, you empower your child to take control of their finances: an essential life skill.