Preparing your student to be financially successful and independent in college is a balancing act. You want to provide financial assistance and give as much advice as you can to help your sons or daughters be successful, but you also want to foster their independence. That means not stifling their individual growth, financially or personally, by being overly involved. So how do you walk that tightrope?
Set Up a Budget Plan with Your Student
If you plan to deposit money into a college spending account for your children make sure you discuss how they should manage it first so they don’t blow it all at once. Help them set up a monthly plan that takes into account expenses like laundry and meals, but also the activities they don’t anticipate, like attending sporting events. Be honest and let them know what your expectations are for spending, as well as for saving money to cover their expenses. Introducing them to free, online management resources like Mint.com is a good way to help them create a budget, track their spending and make responsible financial decisions.
Once you’ve helped your children set up their budget framework, allow them to make it work without interfering. If they struggle at first, that’s okay. The consequences of mismanaging their money at this early stage in life is minimal. It’s better for them to learn from these early mistakes so that down the road when money management really counts they will make better financial planning decisions.
Encourage Financial Independence
Discuss the benefits of working a job in college. A part-time position around 10 hours a week will help your children sharpen their time management skills, productivity and organization. Encourage them to set up their job earnings as a spending allowance instead of using it for tuition or dorm room fees. Doing so will allow them to better learn how to allocate their money and will help to create a connection between earnings and the money they spend. You should also consider encouraging your kids to get a credit card with a low spending limit so they are free to make additional financial decisions and build credit. Credit card debt can be a serious danger for many college students, so impress upon them that credit card interest and charges should be included as part of a budget.
Help your Student Stay on Budget
Creating a budget is the easy part. Sticking with it, however, isn’t always as easy, especially for students who are new to the responsibilities. Staying on budget will largely be up to your sons or daughters, but you can help them in a few ways:
-Suggest that they keep a daily spending record. Jotting down what they spend will go a long way toward keeping track of where the money is actually going.
-Your students probably aren’t the only ones working with a budget. Encourage them to connect with others who are also monitoring their expenses. Sharing budget suggestions with other students can help keep your children cognizant of spending.
-At the end of each semester or school year sit down with your children and review their finances to help keep them on track.
Creating and sticking to a budget can be a real challenge for college students at first. Working with them on financial planning for school, while allowing them to make their own choices, will help them prepare for life.