Helping Your Student Create a Budget
by Karli Greenfield
One of the first major responsibilities that college students face is money management. For many students, juggling college expenses can become overwhelming. Without a plan, it can be easy for students to overspend and fall behind on covering their expenses. Families play a vital role in the college preparation process; offering key guidance around budgeting can make all the difference in setting your student up for financial confidence and independence.Here are five simple, yet effective, tips for supporting your student in building a budget that works:
1. Start the conversation.Most students are not opposed to creating and sticking with a budget; they simply don’t know where to start. Starting a conversation about the importance of money management and budgeting before your student begins college is ideal. Although, it is important to remember that it is never too late to begin the conversation. Speak with your student openly about financial expectations, such as part-time jobs, credit card debt, and savings. Make sure to outline the expenses that your student is responsible for covering. Having an open and honest conversation can go a long way in financial planning.
2. Identify all income sources.While many students may work part-time during college, others may utilize other sources of income to cover expenses. Other income sources during college may include scholarships or grants, student loans, family financial contributions, and college savings. Students should identify all sources of income and determine income amounts expected on a monthly basis (or weekly basis).
3. Identify expected expenses.Similarly, students should identify regular (monthly and/or weekly) expenses and determine whether each expense is a “need” or “want”. Helping your student understand the difference between needs and wants is a critical step in the budgeting process. During college, common expenses may include room and board costs, utilities, groceries, transportation, textbooks, supplies, insurance, phone bills, entertainment, etc. Students should be reminded that miscellaneous expenses can always arise, and usually do!
4. Choose a budgeting tool.Fortunately, many budgeting tools exist, and are more readily available than ever before. Students can utilize a myriad of apps on their mobile devices to assist with budgeting. However, students can also use simple spreadsheets or even a notebook to manage their budget. The important thing to remember is that budgeting does not need to be complicated. Ultimately, you should help your student find a tool that is useful to them and encourages consistency.
5. Engage in regular check-ins.Beginning the budgeting conversation before college means that you have a reason to continue the conversation once they have transitioned into their college career. Encourage your student to stick with the budget they have created, and check-in with them regularly. Even the most responsible student needs accountability, especially when beginning a new task.While creating a budget can seem to be primarily about the numbers (and, yes, the numbers are important!), it is equally about creating positive spending habits, attaining financial confidence, and becoming financially independent. Supporting your student as they master these concepts during college can have positive impacts far beyond college graduation.