As a new semester approaches, it’s time to have “the talk” with your high-school grad: how to budget in college. From explaining monthly expenses for college students to brainstorming ways to cut costs, here are college-budgeting tips to help you set your kid up for success.
1. Establish Open Communication
One of the most important things that parents can do for their college-aged kids is show them that money is not a taboo topic. If they see you as someone who’s comfortable discussing financial matters, they’ll understand that managing their own money is something they’re capable of achieving. Have the money discussion to make sure you’re on the same page about:
- Who’s paying for college, and how?
- Will your young adult need student loans? What’s the best way to manage them?
- How much spending money is needed for college besides tuition?
- What is a good budget for your college student?
2. Build a Budget and Track Expenses
Creating a budget habit is crucial. Explain to your young adult how starting to budget now helps them avoid the dangerous trap of overspending. If they’re completely honest about what they spend their money on each month, they’re less likely to make unnecessary purchases that’ll cost them later.
How much does a college student spend a month? The amount of money can vary depending on many factors, but a sample monthly budget might include:
- Meal plan/groceries
- Car payment
- Books/school supplies
- Medical expenses (prescriptions, etc.)
- Dining out
As you’re creating a list of expenses, be sure to also note how much money is coming in, and from where. Nowadays, there are many great apps that make budgeting a breeze. Read about them together to find the perfect one for your family.
3. Get Creative to Cut Costs
One skill that many college students develop over time is saving money in innovative ways. If your family is paying for tuition, it’s always a good idea to stretch extra money as far as you can. A few ideas to consider:
- Switching to a capsule wardrobe or selling gently-used clothing
- Cooking and making coffee at home
- Living with roommates
- Cutting back on streaming subscriptions and non-essential tech
4. Prioritize an Emergency Fund
It’s scary to think that most young people have no financial cushion in case of emergency. Help your college student understand that having an emergency fund is no less negotiable than tracking expenses or paying bills on time.
If your college student has no savings yet, help them set an initial goal of $1,000 (and enlist the help of an app, if necessary). Stashing away even $10 at a time is a step in the right direction. Review potential sources of income that can help build an emergency fund. These can include:
- Financial aid
- Athletic or academic scholarships
- Campus jobs
- Summer jobs
- Selling used textbooks
- Contributions from family
5. Consider the Future
Budgeting can feel restrictive, especially to someone just beginning to enjoy the freedoms of adulthood. Investing in a budget and a financial plan is like investing in an education; it’s putting in the work now to reap the benefits later. Help your young student understand the power of their choices by putting things in real terms. In five to ten years, having savings and paying off student loan debt could mean a lot of things: more choices in the job market, a hard-earned vacation or being able to enjoy the lifestyle they dream of. It’s a trade-off for the things that matter most.
We Can Help
Your Farm Bureau agent can help you get off on the right foot with smart budgeting tools and savings advice.