You've saved for your child's education and now they're there - congratulations! There are many new experiences for students at university or college, and for many of them this may be the first time they've really needed to pay attention to what they're spending and on what. They may be surprised that doing everything is likely to cost money. Whether your child is already enrolled or attending post-secondary schooling in the next few years, it's always a good time to enhance their financial literacy and ensure they're well-prepared. Here are some ways to help your student make the money last.
Making a budget WITH your student is the first, most-important step you can take. What are the necessary costs per semester/term (tuition, books/supplies, food, rent, transportation, cell phone bill, clothing, etc), and what are the likely extra expenses that will arise (entertainment, eating out, new phone etc). Next, factor in how much money is available per semester/term (from education savings, loans) and create a spending plan per month. If there is a shortfall will your child be working part-time during school to help fund it? Discuss how the money for all costs will be disbursed; will all of the money be made accessible to the student at one time, or will it be given out in periodic payments over the educational year? Who is responsible for paying for what - will you pay the school and the cell phone bill directly and your child pays for their clothing and transportation directly? Discussing the specifics and logistics of who pays what and when can help avoid assumptions and unhappy conversations.
When the "money-in and money-out" calculations done and written down, ensure both you and your student have a copy; you are partners in this post-secondary adventure and ensuring both of you are clear on the details is important. A visit at Thanksgiving or Christmas provides a good opportunity to review the budget and spending to date. Remember, this experience may be new to your child and they may need some check-in points and possible guidance for staying on course with the plan.
2. Keeping Receipts
Keeping receipts (either physically in a file folder or using an app) is an important step to help your student keep to the budget you've created together. Reviewing where the money has been spent helps with knowing if the allocated amounts per category are realistic or need to be re-allocated, AND it provides actual details for a review to see if they're on track with their spending. The last thing anyone wants is for the money to be gone by Christmas.
3. Credit Cards
One thing that holds true is that banks still want to hand credit cards to students. This can be a good idea in theory; something could go wrong, your child needs money and you're perhaps hundreds of miles away and unavailable to help immediately. Sometimes, it’s not so great for the kids who may suddenly see the credit card as a source of extra funds and a way to deviate from their budget.
Have a good conversation with kids regarding credit cards, interest rates, how repayment factors into their budget, penalties for not paying amounts owed on time, and encourage them to talk to you if they're considering getting one.
4. Cooking and Shopping
For some students, their time at post-secondary school may the their first real experience with shopping for themselves - or at least shopping for "un-fun" items such as groceries. While some students stay in residence and have access to available meal plans, this may not be every student's experience, or the residence and meal plan may only be available during the first year of school. Taking your student grocery shopping and teaching them about nutritious, cost-effective meals and groceries (no-name anyone?) will help them with their budget AND their nutrition. Helping them find a handful of "go-to" recipes (the fewer ingredients the better) will set them up well.
Like grocery shopping, bargains exist when shopping for any item. The world of online shopping allows easy, quick cost comparisons, but also allows easier impulsive shopping opportunities. Talking to your student about reviewing their budget and the 24-hour rule (where purchases other than necessities are reviewed for 24 hours before purchasing), can help them learn good habits to use during their schooling and into their adult after-school lives.
Talking with your kids this way about money might be new for you, but involving your children in these conversations shows them you accept that they're maturing and that they're ready for increased responsibilities. Remember that this isn't a one-and-done conversation; you will likely have to re-visit the budget and spending conversation many times. While these conversations may not always be easy, they are also a way to continue to show your parental caring and support - and even if they don't readily admit it, your kids will appreciate your effort.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.