By the time your child heads off to college for the first semester, you've already coached her on the vagaries of dorm life. You've probably covered roommates, drinking, time management and academic expectations. But have you talked about budgeting?
For most college students, freshman year is their first foray into independent living, and some solid advice and healthy boundaries now can add up to good financial habits for a lifetime. Setting a reasonable pocket money budget – this is the spending your child will do after tuition and books and room and board have been paid for – and helping her stick to it will go a long way towards establishing financial independence.
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First determine how much money your student will need on a monthly basis. Toothpaste, shampoo, coffee, late night pizza, new clothes, movie tickets, and other entertainment should all be included, and agreeing on a number can be a challenge. "Most of us really have no idea how much money we spend until we track it and write it down," says Mark Nash, Chicago-based author and financial columnist. "Even the 99 cent downloads add up."
Sit down with your child and talk about her daily and weekly spending habits. How many times a week does she go to Starbucks (SBUX)? If your weekly budget is $100, a daily latte sucks up nearly a quarter of your spending money. Very few of us live in a world where money is no object, and the trick is to provide your child with enough money so that you both feel comfortable, but little enough so that she has to make choices. A latte a day, or concert tickets at the end of the month?
