College is just around the corner, and all of your family’s hard work is about to pay off. The high school grad party was a hit, and everything on the dorm room checklist is checked off. But your job as a parent isn’t over yet. As college approaches, so does the reality of your future college student’s newfound freedom.
It’s time for them to grow into their independence. As a parent, that means showing them how important it is to make smart decisions, whether that’s choosing to attend class or how to make money last.
This financial responsibility may be new to them. Sitting down to have a conversation about finances will help them learn how to make smart decisions now, and down the road.
Starting From the Same Page
It’s surprising how many college students don’t understand how expensive college truly is, nor the impact it has on a family’s finances. Having a “big picture” conversation with them about the costs will give them a new perspective on responsible money management.
Agreeing on Expectations
Once you’ve laid the groundwork, it’s time to decide who will be held accountable for what. These discussion-prompting questions will help set these expectations.
Who is handling what expenses?
Besides agreeing who pays for tuition, room/board and meal plans, what about the smaller expenses? Those are just as important to managing college.
Where will your student’s money come from?
Summer job savings only go so far. Where will their money come from? Most universities have on-campus federal work-study part-time and full-time programs that help students maintain a steady cash flow.
How will you and your child communicate along the way?
Keep in mind that circumstances change, which causes financial responsibilities to shift. Create a consistent line of communication, whether that’s through text, email, etc.
Setting the Budget
While it may seem overwhelming, building a budget establishes a spending plan and helps avoid the pitfalls of debt.
- Start the budget by prioritizing mandatory bills, like food and transportation.
- Account for lower-priority expenditures, like cell phone, internet, or credit cards. Factor in how much money is allocated to entertainment—going out with friends is part of a healthy college experience!
- Think about a realistic amount of money that can be put aside and saved.
Having a budget in place is an excellent start to sensible spending, but what sort of resources will keep you on track? Budgeting apps, debit and credit cards, and savings accounts are banking tools worth introducing to your child for a jump-start on a savvy financial future.
Down the Road
Preparing your child for their financial responsibilities at college isn’t a one-and-done conversation. There will be plenty more discussions as things change and new opportunities present themselves. But setting a foundation for responsible decision-making will help them grow outside of the college classroom.
