Budgeting for the college student is essential for success during this new season in their lives. Being a college student or teenager who knows how to manage finance is a rare find. Some teens are natural savers and some are spenders. It is part of their genetics and they will need to learn to budget just like adults.
Hi, this is Candi back again to share some budgeting tips for the college student. Over on my blog I share how to create a budget for adults with printables, which will be fundamental after you get out of college.
High school for the most part skips over this lesson or does it in such a general way, that teenagers miss out. Generally when teens get their first job, they want to go on a spending spree and unfortunately they can start to create bad habits of overspending.
Depending on what you may have taught your teen about budgeting from allowance or a part time job they may have had in high school, it’s time to make sure they understand what may be different now they are going off to college and spending time in the real world, where mom and dad aren’t there with an open wallet.
The time to start teaching them to budget, is when they start to show interest in their first job or before they graduate. Here are some tips to start them on a positive track.
Budgeting for The College Student:
- Where will his/her income come from, a part time job, savings, financial aid and how often they will receive payment.
- The budget will determine how often they will get paid and what expenses are due: Car, insurance, gas, food, lodging.
- Once they understand the budget, I recommend they get an accountability partner, (parents, teacher, friend, mentor) (affl. link) Dave Ramsey has many resources, podcasts, call in radio, and email. This will help them stay on track.
- They will need to incorporate everything in their budget they do, Including entertainment and an emergency fund.
- Show your child how to track expenses by saving receipts and keeping an expense log. Knowing where the money is going will help your college student stay on track. Usually we have to readjust the budget each month to plan for seasonal expenses. Encourage your child to plan ahead for big expenses.
- Remind your child to use the 3 category method when they receive their paycheck, (Charity, Savings, Spending) This will create a positive and responsible financial start to budgeting.
Opening a bank account:
Chances are your college student has already opened a bank account, and they may have to move it or change branches to get closer to school. Remind them the costs associated with a bank account.
- Monthly fees
- ATM or debit card fees
- Online or telephone access to account information
- Overdraft protection
To avoid bouncing checks, it’s essential to keep accurate records, especially of ATM or debit card usage. Show your child how to balance a checkbook on a regular (monthly) basis. Most checking account statements provide instructions on how to do this.
Most banks now offer savings accounts that are attached to the checking account and it’s a good idea to have an automated savings transfer close to their payday, to start building savings.
When your Teen turns 18 the credit card companies are right at the mailbox with dozens of credit applications. Many banks now teach that your teen needs a credit card or a car loan to give them a good credit score.
Did you know you don’t need a good credit score because credit isn’t necessarily a good thing. It’s great for banks and lenders because that is how they make their money, by enticing people to borrow because it’s helping their credit score. If they have a credit card here are some tips.
Here are some tips to help your child learn to use credit responsibly:
- Teach your child to review each credit card bill and make the payment by the due date. Otherwise, late fees may be charged, the interest rate may go up if the account falls 60 days past due, and your child’s credit history may be damaged.
- If your child can’t pay the bill in full each month, encourage him or her to pay as much as possible.
- Make sure your child notifies the card issuer of any address changes so that he or she will continue to receive statements.
Finally, remind your child that life after college often involves student loan payments and maybe even car or mortgage payments. The less debt your child graduates with, the better off he or she will be. When it comes to the plastic variety, extra credit is the last thing a college student wants to accumulate!
You can find many resources and podcasts regarding finances online for budgeting for the college student and teens. The goal is to prepare your college student for success.
What are your tips for helping teach budgeting for the college student? Leave a comment with your best advice.
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