Parents: How to Create a Budget for Your College Student

by Ron Haynes

Okay, you did your job: You child is no longer a child. She’s grown up, has one of those “getting started” jobs, has a car that you mostly paid for, has a cell phone that you mostly pay for, and is heading off to a college … that you’ll mostly pay for. She needs a budget (and you do too!).

college_student_budget YNAB is probably your best bet for getting a college student prepped for her financial life as an adult, but you don’t have to buy award winning software to create a budget. You CAN use the ancient technique of pencil and paper. Yes, it still works.

Buy-in is critical for a college student on a budget

The most important aspect of creating a budget with another person is their buy-in with the whole process. NOT getting buy-in is a huge mistake. Buy-in insures communication and assures your student that you’re open to modification is expenses exceed your expectations.

Flexibility with a budget is vital

What’s next? Flexibility. This is her freshman year and she won’t know what to expect … she CAN’T know what to expect, and most likely, neither can you. Setting strict, inflexible limits on her grocery bill or entertainment expenses just isn’t feasible. You can set reasonable limits on her total amount of spending, however, and that’s probably the best way to proceed. Studies show that people are generally pretty good at keeping things in line financially when faced with a year’s expenses, but not so good at estimating what they’ll need next week! You probably should expect your student to be any different.

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Where will your college student get her income?

To begin, you’ll need to know how much is at her disposal each month. Will you contribute as a parent? Start with YOUR budget first, then add in any scholarship or grant money that she expects to receive over an above her tuition, books (hint: try College Book Renter), fees, supplies, room and board. Be sure to include any of her accumulated savings as well as any earnings she will receive from a work-study or part-time job. That gives you a general framework for your college bound student’s budget.

Fixed and variable expenses

Next, you’ll need to get a handle on her fixed expenses such as car insurance, cell phone, off-campus rent, etc. Then we get to the variable expenses such as clothing, food (outside the meal plan), transportation, and “fun.” This is the tricky part of your calculation. Remember what it was like when YOU were in college?

Ask for budgeting help from the college

Stop by the schools financial aid office and ask if they can provide a sample budget for new students. Even if they don’t have one, they probably have a list of common expenses to help you formulate a spending plan.

Once you have your annual numbers, you’ll need to break it down into months and if she’s comfortable with it, into weeks. It’s a smart idea to get it down to the weeks calculation because if she gets ahead of herself and overspends one week, she’ll know to make adjustments next week to get back on track.

Help her learn money management, not just budgeting

One way to force her to budget properly is to keep her monies in an online savings account at a bank that also has checking (ING Direct Checking or Everbank Checking). This way you can set up periodic transfers from savings to checking. She will earn a little interest and will learn to make wise use of her money!

If … or when … she makes a bad money decision

One final note: if she blows it, dipping into her savings account to buy her new boyfriend the electric guitar of his dreams or to take her “bestie” on a road trip to the beach for Spring Break, DON’T bail her out. If you do, I will personally guarantee that she will do it again next semester, and the one after that. A better bet is to have regular budget meetings over the phone with her to insure she stays on track and learns money management. I would also recommend checking her online bank accounts to make certain that what she tells you matches reality.

About the author

Ron Haynes has written 988 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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