By Al Krulick
Congratulations empty nester! You’ve sent your fledgling off to begin college life armed with all the necessary wisdom and maturity to ensure a productive and meaningful post-secondary career, right? Of course not!
What 18-year-old has the experience and life skills to be able to navigate this new phase of existence smoothly, without making some mistakes — especially someone who is leaving the security and predictability of home for the very first time?
Well, parents, you’ve taught them the best you can: How to use good judgment, make smart decisions, and how to deal with people honestly and respectfully, while maintaining a prudent caution concerning all new acquaintances. Presumably, you’ve also taught them the basics of good hygiene and good housekeeping.
But did you remember to teach them about money? The truth is, most incoming freshmen have had the luxury of living under the economic umbrella provided by their loving parents for their entire lives. Yes, they may understand how ATMs and credit cards work; they may even have had their own jobs and managed their own small savings accounts. But how many of them have had to make all their own daily, monthly and yearly financial decisions with minimal oversight from mom and mad?
So before you unload the U-Haul, make sure that you’ve instructed your son or daughter on how to live on a college budget:
First, get your child a list all of college’s fixed expenses in one column of a spreadsheet or ledger – tuition, fees, room and board, etc. You’ll get these costs on the fall semester bill, sometime in July.
Next, have junior enter how much money is available to pay for everything: from you and any other relatives, from scholarships or financial aid, from his or her own savings and any income from summer, part-time, or work-study jobs on campus, from any other sources of cash, and from what you expect to borrow in student loans.
If there is anything left over after the fixed costs are covered, the remainder will have to cover all of the variable costs — books and classroom supplies, transportation, personal items such as toiletries, haircuts and laundry, clothing, recreation and entertainment, phone bills, and any student loan interest your child may be paying while still in school.
Now, once your young adult has the list of variable costs on one side and the amount of available funds on the other, it may be a good time for you to step back and let your son or daughter start using the good judgment you have already insisted he or she possesses. Because here is where your child is going to have to make estimates and choices about where to spend and how much.
In other words, let your kids make their own budget decisions about how to pay for their variable expenses. This way, they will take ownership of the plan, and that will help foster the necessary self-discipline to stick to it.
Of course, you can remind them to continually review and modify their budget over the course of the first semester so that they can reallocate their spending when necessary and still live within their means. You can also remind them to save a little for emergencies.
But once your child gets into the habit of being fiscally responsible on his or her own, the college years will be freer of worry — for both of you.
Al Krulick is an award-winning journalist with dozens of years of writing experience. He writes and blogs for Debt.org.
