Every fall, there is a new batch of high school seniors stressing out as they realize that soon they will be on their own at college. At the same time, parents may find themselves wondering how in the world their kid is going to survive on their own.
That’s why we wanted to put together a list of some financial tips to help you and your child plan ahead and, hopefully, ease some that stress.
- Set Expectations Before They Leave for School
Before arriving at school, sit down as a family and talk about what will be expected of the student financially. Beyond the larger expenses of tuition, room, and board, it is also important to discuss smaller matters. Some highschoolers are used to having their expenses paid for by their parents, but this will change as they grow older and move away for school. A few things to help begin the discussion as a family are:
- Will the student have a car?
- Who will pay for gas and insurance?
- How will extracurricular activities be funded?
- Will the student have a meal plan, or will they need a stipend for groceries?
Establishing clear expectations between the student and parents can give both peace of mind during this transitional time.
- Create a Plan Before Each Semester
Using the expectations that have been set, begin creating a plan. A good strategy for a college student may have a long-term agenda, but will likely focus on the short-term. Due to the nature of going to college, a semester is a good time horizon to work with.
A starting point for this plan can be to lay out all the recurring expenses the student will be responsible for. After that, set limits for the variable expenses such as food and transportation, being sure to allocate funds for fun things. Everyone, college students in particular, will spend money on entertainment, and failing to plan for this will likely lead to an early abandonment of the plan.
|Semester 1||Monthly Cost||Funding||Notes|
|Rent||$600||Parents send money monthly||AutoPay’s on 30th|
|Food||$75||Savings||Does not include meal plan|
- Set Aside Time to Review Spending
At the end of every month, the student should set aside some time to go over their spending. This gives them the opportunity to make sure any end/beginning of the month bills will be covered. In addition, they can identify any areas where they may have deviated from the plan, and any areas that need to be adjusted.
If the student is not able to meet their goals, it is important to not get discouraged. College is the time for them to build good financial habits, this includes learning how to self-regulate spending.
- Use Technology to Help Inform Decisions
Many banking apps come with software that tracks expenses, and if not, there are many good options online that can connect to the student’s account and help them manage spending. If they find that sticking to a plan is difficult, this may be a good option to help them see the distribution of their expenses.
When it comes time to review their plan, they may find categorizing the data is overwhelming. Some helpful tips are to use the software mentioned above and categorize as they go. Often, once they categorize a specific spending habit, they will not need to do so again.
- Use Available Resources
The easiest way to make a financial plan sustainable is to spend less money. Using student discounts where they can and being on the lookout for scholarship opportunities is a good place to start. But, if they want to go further, coordinating meals with their roommates will help reduce waste and allow them to buy in bulk. A membership at a place that sells at wholesaler quantities like Costco or Sam’s Club may end up saving a significant amount of money.
Especially around the beginning and end of the school year, be on the lookout for free items. As other students move in and out, TV’s, couches, and office furniture often get left behind.
- Expect the Financial Plan to Change
Many students find that they move throughout college. This can not only have an impact on their room and board costs, but also on gas and other incidentals. This is why it is important to plan at the beginning of each semester.
As they progress through college, their financial situation can change frequently. And once they have graduated, it is unlikely that it will remain static for long. Adjusting the budget semi-annually to fit their unique lifestyle will put them ahead of most recent grads, and far beyond most college students.
- Spending Time is Just as Much a Cost as Spending Dollars
Early in their college career the student may prefer to spend a little extra time if it means saving a few dollars. Progressing through college means they are gaining knowledge and skills, but will have growing coursework and responsibilities to juggle, as well. This makes their time more valuable, and this should be considered when planning. It may be more efficient to occasionally spend a few extra dollars if it means saving a lot of time.
To wrap up the article: Plan ahead, pay attention, and practice good financial habits.
If you would like some more information on healthy financial habits, Elizabeth Schleifer recently wrote an engaging blog on this topic: Healthy Financial Habits and Investment Plans.
Presented by Alexander Lilly