Talk about ways to economize. Making coffee in the dorm or getting it at the dining hall is a cheap and caffeinated alternative to Starbucks. Also, money saving entertainment options exist on most campuses, like free movie nights and student performances. Remember, college should be academically demanding and studying doesn’t cost a dime.
Once you've come up with a budget that seems reasonable, it's time to re-enforce smart spending habits. Nash cites a 2005 Quicken (INTU) study that found 72% of college students called home for money over the course of a given semester. To encourage a feeling of ownership over their finances, he recommends rewarding your child when she doesn't ask for additional dollars. "Set up a system where they get a bonus if they come in at budget for several months in a row," he counsels. Nash also suggests building a savings plan into the monthly budget, with the understanding that your student is saving toward spring break or some other reward.
And, there's one money mistake that you absolutely want to help your college student steer clear of - credit card debt. Credit card companies set up booths on college campuses, offering free coffee mugs or Frisbees in return for a completed application. It's unbelievably easy for students to get a card and the easy money mentality they encourage, not to mention their high interest rates, are incredibly dangerous. Instead, have your student's name added to one of your accounts, and send her to school with a clear understanding of when and how it may be used. "Credit cards should be emergency use only and parents should be willing to take them away," says Nash. He recommends a pre-paid debit card for emergencies, to remove the credit temptation.
