If your student is about to head off to college for the first time then it is time to sit down and talk about a budget. Those parents who have never discussed money with their child before should be prepared for looks of shock, and possibly even some verbal protests. The truth is that your almost-adult needs to learn about handling money, and learn it now before things get too out of control at college.
College is so different and exciting for new freshmen that it can be hard for them to think about money if they have not received any parameters from their parents. Financial aid only covers so much of the bill, and your family will be responsible for the rest. Before your student sets foot on a college campus, here are a few budget reminders you will need to cover:
• You are not a bank: Most students are accustomed to simply asking their parents for money whenever there is a need – gas, entertainment, cell phone bills, clothing, or personal supplies – but that is harder when the student enters college. Parents now have the extra expense of paying all those college bills while still paying for their everyday expenses. Before the semester begins, you need to talk to your student about how much money is available and set a realistic monthly budget. You can make deposits into a bank account or provide a prepaid card, but the student shouldn’t be able to call every time there is a perceived financial emergency.
• They do have resources: Most parents take such good care of everything for so long that students often don’t realize they have resources they can use. They can figure out their own budget, projecting available money and anticipated expenses, and offer solutions to any shortfalls. Ask your student to participate in discussions about how to increase income or decrease expenses, and you might be surprised at some of the creative responses you receive.
• Student loans are not a cash cow: Don’t borrow the maximum amount on student loans, allow your student to spend unwisely, and then act surprised at the amount of debt there is to repay. Consciously think about the amount of student loans you are borrowing as a family, and have intentional discussions about who is going to be responsible for repaying these borrowed amounts.
Freshmen should also be wary of easily-available credit cards. These may seem like an all-too-easy solution to money problems, but they usually lead to even deeper debt holes.
Get more information on budgeting for college students in my new book, Secrets of a Financial Aid Pro. It takes parents and students through the life-long process of thinking about money before, during and after college; discusses federal and private student loans; and recaps the entire financial aid process. Order it now, and start involving your children in discussions about how your family will need to budget, plan and pay for their college education.