Off to college go the kids. For them, it's the thrill of independence. For parents, it's thethrill of victory -- and also the "cha-ching, cha-ching" of money, gobsof it, out the door.
There's the inevitable tuition and room and board, of course-- expenses typically paid up-front, before the semester starts. Butfor another category of costs, everything from cell phone bills tolaptop purchases to good old-fashioned pocket money, the students mayneed to be in the driver's seat. Which raises some important questions:How much should you give your college kids as spending money? How muchis too much? And how do you know they'll spend it the way you want themto?
Zogby International, a leading polling firm, asked parentswhether they suspected their children were spending the money they sentfor college expenses on other things. Surprisingly, 79 percent said"No." This is a touching show of faith. But as trustworthy as your kidsmay be, a little schooling from you in the financial basics willprotect them -- and you -- from trouble down the line.
Let's start at the beginning, which is always a budget.
Simply, a budget is a description of "money in" and "moneyout." As a parent, you have some control over the "money in,"especially if you're supplying it. But in some cases, your child willcontrol the "money out." That's why it's important to sit down withyour college-bound child and figure out a budget together.
The budget should include such things as books, cell phonecosts, Internet access, snacks beyond the meal plan, entertainment,transportation, travel and personal items. Make sure to divide theexpenses into one-time costs (such as books, often bought once asemester) and regular expenses, for which you'll need a weekly ormonthly estimate. Figuring out how muchyou'll need for each category will be a negotiation process. Your new student may feel thatdesigner coffees and shakes are a staple at $10 a day, which adds up to$70 a week and over $1,000 a semester. You may disagree; show them thesavings they can reap from a coffee maker and a can of ground beans.The budgeting process also is a chance to teach your child valuablelessons in bargain-hunting. With book expenses in particular, a littleresearch can make a big difference. A 2005 study by State PublicInterest Research Groups estimated that students spend an average of$900 per year for books. But many colleges offer used books, and thereare also online sites, including www.bigwords.comand www.campusbookswap.com,where your kids can search for textbook bargains. (When buying usedtextbooks, make sure your child has the exact title, author, ISBNnumber and edition of the text the professor requires. An old editionmay not meet the requirements). Students can also recoup some textbookcosts by selling their used texts at year's end.
A couple of "don'ts" for the budgeting process: First, don'thand your child credit cards. Unless you prearrange with the creditprovider, your child will have access to your credit limit, and formany students, the card is nothing more than magic plastic, no stringsattached. Second, don't give your student the entire amount for thesemester in a lump sum, or even put it all in a checking account upfront. Consider this the "training wheels" part of the budget: Untilyou're sure your child has the hang of the budgeting process, put justone month's sum in the checking account at a time. Or, better yet, gethim or her a cash card, which you "pre-load" and "re-load" at yourdiscretion.As a college student, the adjustment from a world ofentitlement to the real world of finite resources can be very shocking.Your overall goal is to make money management a life skill. If youhaven't started money lessons yet, it's never too late tobegin. Source:Associated Press. Powered by Yellowbrix.
Source: Money & Work