It might be a paradox to some, but the best time to learn how to manage money is when you don’t have a lot of it. College is often the first time young adults are tasked with making their own spending decisions. Getting comfortable with talking about money, learning to be thrifty, and sticking to a budget can be great tools to reduce stress and keep the emphasis on learning.
The best time to talk with your teen about money is before they run out of it. Ideally, setting expectations and limits for spending should be discussed well ahead of campus arrival. Following are topics you may want to discuss:
- The big picture: total cost of attendance, scholarships, grants, loans, or work-study options.
- Expenses your teen will be responsible for, and expenses that will be covered by others. A quick list includes their cell phone bill, car payment and insurance, or other transportation. Don’t forget to include rent if they are living off-campus. Food, books, clothes, student activity fees, and entertainment, such as football or basketball tickets, should also be considered.
- Will your teen need a part-time job?
- How many meals are provided on their school’s meal plan, and how should extra meals be purchased?
- Does your teen have checking and savings accounts? Do they understand how they work, including fees for non-sufficient funds?
- Will they have a credit card? If so, what kind of purchases can they make – or is it only for emergencies?
After discussing and documenting all the expenses, and who is responsible for them, take a look at how much money is needed per month. Is it workable? If the money going out is more than the money in their budget, it will be necessary to think critically about wants versus needs. And maybe a part-time job might make sense to cover any gap.
