Have you had this fun discussion with your teen yet?
With the fall semester of college underway, it is time to make sure that you and your college-ager are on the same page when it comes to a college budget.
You have already accounted for the cost of tuition, but you need to work with your teen to figure out how they will deal with other expenses that come up and how much support you will give them.
As you work through the budget together, be sure to cover the following crucial points:
Will Your Teen Work While in College?
Start by determining whether you expect your teen to work while in college or just focus on their studies. My two cents - they should work. Unless they are in law school, med school, or some other extremely expensive and taxing environment. But let's face it, most of us have kids going to average schools.
Don't tell yourself that their studies will suffer. Studies show that students who work while going to school actually have higher GPAs. And students who have outside jobs get great work experience. In fact, I used to work with a man who said he'd never hire anyone who didn't work while going to college. No one wants a pampered employee, am I right?
If your child has to pay for his or her "discretionary" expenses, I guarantee you that they will be a lot more discretionary in their expenses! $8 smoothies don't taste quite as good when you think of the hour you spent as a french fry jockey to earn the money.
Sweatshirts from the campus bookstore, Uber rides when they're just a bit too fatigued - you can bet they will be more frugal if it's their money at stake.
Plus, the list of jobs kids can get today are so varied. You don't have to have a car. My first year at college I worked in the cafeteria. Today's kids can be working as Virtual Assistants, selling on Etsy, tutoring via Zoom. The world is at their feet!
Who Pays for School-Related Expenses?
After going over whether your teen should work, it is time to break down each category of expenses one by one. As you go, set a budget for each and determine who will pay for these items.
First, decide whether you or your teen will be paying for the school-related expenses. Since you already accounted for tuition, this includes things like textbooks, their laptop, notebooks, pens, and other school supplies. Many parents choose to help their teen with these expenses as they are seen as necessities, but you will still want to set a budget. Your teen doesn’t need a a new laptop if he already has one.
Who Pays for Other Essentials?
Next, discuss other essentials that are not related to their education. Think of this as things like toiletries, housing, laundry detergent, and basic food items. In other words, it is the items that you would automatically pay for if your teen still lived at home. Because of the essential nature of these items, many parents do consider paying for the items but will set a budget to start teaching responsibility. Figure out how much your teen needs to spend on these items each month and let them know that this is what you will pay for. If they want luxury versions instead of store-brands, they must pay the difference.
Will the Teen Have a Car? Who Pays the Expenses?
Do not forget to consider whether your teen will have a car at school, as the cost of an auto can add up fast. Even if the auto is your old used car that is fully paid off, there are still regular expenses, like insurance, gas, maintenance, and parking. Because of those expenses, some parents will partially support their child having a car on campus, while others let their teens have a car only if they pay for it themselves. Once again, calculate how much this should cost every month, if it applies.
Who Pays for Extras?
One category that can become more complicated when budgeting is the extra non-essentials. This covers things like top-of-the-line smartphones, college football games, going out for meals or with friends, and taking an Uber instead of public transportation or driving. Most parents will not want to just fund all these things without a limit, as that is not feasible financially for most families and does not teach responsibility.
Instead, you will either want to set a maximum amount you will give your teen every month toward these extra expenses or expect them to cover the cost themselves with their job. Whether you pay for these non-essentials, work with your teen to set a budget, so they are realistic about spending and can develop financial responsibility.
Budgeting for Travel Between Home and School
The final aspect of your budget should be travel expenses between your home and the school. Start by figuring out how much it costs to get between the two locations, which can vary greatly depending on the distance and whether your teen will drive or fly. From there, figure out how many weekends a month your teen can reasonably afford to come home.
Who will pay for the travel expenses? If your teen has a car on campus and you live close, they will likely drive, so will you pay for gas? If the college is within driving distance but your teen does not have a car, will you drive to get them? Or do you expect them to save money by carpooling with someone? Consider all these factors and determine if they will just come home for holidays or more often.
Are Your Contributions Gifts, or Do You Expect Something in Return?
When discussing your teen’s college budget, you also need to make it clear whether the financial support you provide is a gift or if you expect something in return. This can go either way, with many parents seeing college-related expenses as a part of raising a child and, therefore, expecting nothing in return.
I think everyone should work. At the very least, they can tell their kids how hard they had it. wink wink.
I'm a personal finance geek. A real estate investor. An accountant, a single mother. And I'm going to get my kids through college without student debt! Will you?