Money Tips for College Students
If your child is heading off to college for the first time this September, there will be a lot of changes and new experiences on the horizon. When a young person moves out for the first time, they suddenly have a lot of newfound freedom. This can be exciting and a great learning opportunity, but it can also get them into trouble if they’re not prepared.
That’s why it’s important to make sure you teach your child to budget before they head off to college.
Here are some tips for doing exactly that.
Helping College Students Learn About Budgeting
- Figure out where their money is coming from, and how much is coming
- This will obviously be different for each person. Some students will have part-time jobs, others will have money from financial aid, while some will get some money from their families, or a combination of various sources. Help them figure out how much money they will have and when it will be coming in.
- If you’re helping your child financially, you’ll also want to be clear about how you will split expenses with them. For example, you could offer to pay for their books and their trips home, but their clothing, food and entertainment expenses will be up to them.
- Teach them to track their spending
- Tracking your spending is a crucial part of budgeting. If you don’t know where your money is going, it’s nearly impossible to control spending and make adjustments as needed.
- Plus, when you track your expenses and then review them, it’s easier to see how spending more money in one area gives you less money to spend in another. This is an important lesson.
- There are several different phone apps out there that make tracking spending simple.
- Make sure they know the difference between needs and wants
- This is a big one and, sometimes, it can be confusing. For example, everyone needs to eat, but they don’t necessarily need to eat at a restaurant. It’s important that you stress the difference between these two situations.
- Certain expenses are needed, such as housing, clothing, school expenses (such as books, etc.), and transportation. Others are wants: concert tickets, nights out with friends, etc.
- Help your child figure out what their needs will be and the difference between needing clothing to go outside versus needing stylish clothing to wear out on the town, for example.
- Teach them that some expenses are fixed and others are variable
- There are basically two types of expenses: fixed expenses and variable expenses.
- In general, fixed expenses do not change. These are costs like housing, cell phone bills, tuition, etc. Variable expenses can change each month depending on what you buy. This includes everything that isn’t a fixed expense, such as food, clothing, entertainment, etc.
- Teach your child that they need to budget enough money to afford all of their fixed expenses and then that they figure out a way to use whatever they have leftover to pay for their variable expenses. Show them that they may have to cut some variable expenses to make ends meet.
- Planning for emergencies and the future
- One thing that everyone who creates a budget has to keep in mind is that unexpected things happen. Your car might break down, for example, and you’ll need to pay for a repair. If you haven’t budgeted for a potential emergency, how will you get the money for this repair?
- Even if you’ve decided to help your child afford emergency expenses, it’s still important that they understand how crucial it is to budget for them.
- It’s also important to plan for big expenses. If your child wants to take a trip over spring break or during the summer, encourage them to put together a plan to pay for this expense. They may not be able to save all of the money themselves, but the idea that you need to plan for big expenses is one that will help them for the rest of their life.
Managing money can be a challenge, but it’s an important skill to learn. A budget doesn’t just make sure you don’t run out of money, but it also helps you reach your financial goals and plan for the future. If a person learns strong financial skills before they’re fully out in the “real world,” these habits and skills will help them with every aspect of life going forward and allow them to be more financially responsible in adulthood.
It’s also important to let your child know that they should come to you for advice at the first sign of financial trouble. After all, they’re still learning.