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If your child is heading off to college soon, you’ve probably considered costs like tuition, housing, food and books. But have you considered your college student’s need for spending money?These are the one-off expenses like concert tickets, late-night pizza orders, or a university sweatshirt imprinted with the school mascot.
And all those expenses can quickly add up. It’s never too early to start discussing college spending and budgeting with your teens. Here are a few things to consider when financially preparing for freshman year:
1. Understand What Constitutes College Spending Money
We all know college is expensive, but there are many unforeseen expenses that can add up quickly. Spending money is a term for the funds reserved for unplanned, or “fun,” expenses like travel, entertainment, etc. When discussing spending money with your college students, you need to decide what expenses you’ll cover and what will be their responsibility. Many families expect their college-age kids to come up with their own spending money from a summer job or from part-time work during the school year. Set the expectations early for who’s covering what to avoid any mid-year miscommunications. It can be costly to make assumptions when it comes to new-student spending!
2. List Spending Money Expenses
Working with your teen, create a list of potential expenses that they might cover using spending money. This helps you and your teen begin to plan and prioritize expenses. Here are just a few possible expenses to consider in the beginning of their first school year:
- Gas/travel money
- Clothes
- Food/drinks not included in meal plans (dorm snacks, coffee shop drinks, off-campus dinners)
- Entertainment
- Supplies for sports, music or academic activities
- Laptop and related equipment
- School supplies
- Textbooks
3. Establish a College Student Budget
How much money should a college student have? On average, college students spend $2,000 in spending money each year. Set your college student up for success by helping them create a budget early on. There are many different ways to set a budget, but remember that college student budgets aren’t one-size-fits-all. Every student is different, and budgets should depend on the college, location, meal plan, student activities, etc.
Tips for creating a budget for college spending money:
- Calculate monthly income (from a current job, summer savings or an allowance).
- Look ahead to anticipate big spending money purchases like flights home, holidays gifts or a new laptop.
- List recurring costs — for example, trips to the coffee shop, seasonal clothes or streaming subscriptions.
- Explore different budgeting techniquesand money tracking apps.
4. Prepare Your Teen Early
Before your college student heads off to campus, ground them in personal finance basics:
- Personal checking: Encourage your teen to open their own personal checking account, so they can gain experience making deposits and tracking expenses.
- Credit card: Credit cards are a great way to instill responsibility, but they can also be a recipe for financial disaster. Now is a good time to help your teen open and manage the use of their own credit card. Teach your kids the difference between debit and credit, and the importance of never charging for purchases they can’t repay. Also, be sure to educate them on compound interest, and help them understand how different credit cards charge varying fees.
- Lead by example: How do you track your earnings and expenses? What does your monthly budget look like? Take some time to share your personal finance strategies with your teens before they go out on their own. They’ll appreciate your transparency.
- Kids’ savings account: Does your college student have younger siblings? Start even earlier with them! It’s never too soon to start teaching your kids the value of money, and the value of saving money they earn. Many banks offer savings accounts designed especially for kids under the age of 13.
This is an exciting time for you and your college-aged kids. Getting a college budget and spending money plan laid out now will give you peace of mind. It will also allow your college student to enjoy their time at school instead of worrying so much about money.
First National Bank and Trust can support you and your family’s financial needs at every stage of life. Find a branch near you, or contact us to learn more.
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