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.

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?

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.

If you've heard the argument that a credit card helps build a student's credit record and that they are more difficult to get later on, ignore it. The truth is student loans are a much safer way to build a credit history. Their interest is tax deductible (and easy to calculate on a tax return) and they can be deferred in times of economic hardship. Try that the next time a MasterCard (MA) offers your college student a Nerf basketball.