One extracurricular activity that every student can master while in college is personal money management. Typically, a student’s daily spending is done on an improvised basis, meaning that overspending is often the norm rather than the exception.
It is estimated that during a school year, the average college or university student will spend over $4,000 for books, supplies, transportation, and personal expenses (Trends in College Pricing—2013, The College Board). However, there may be room for economizing.
While many students may assume it costs less to live off campus than in a dorm, they may be in for a surprise. In college towns with a high demand for off-campus housing, accommodations within walking distance of the campus may tend to be more expensive. Some landlords require a one-year lease—a period longer than the academic calendar year. On the other hand, off-campus students can save money by sharing housing and doing their own cooking.
Money Smarts 101
- Before your student leaves for college, sit down and have an open discussion of mutual expectations regarding finances.
- Consider providing a lump sum each semester, setting guidelines on how long the money must last.
- Explain when checks or money transfers can be expected, the amount he or she will receive, and any rules concerning use of the funds.
Since most students rely on savings and checking accounts—regardless of whether it includes their parents’ funds, their own, or a combination of both—it is important for them to understand how they work. The ability to balance an account and spot any errors is especially critical.
Many undergraduates tend to keep most of their funds in hometown financial institutions. However, managing personal finances long-distance can create challenges. Transferring money to college students in different locations can sometimes be frustrating. Even with the convenience of online banking, it may be a good idea to open a smaller account on campus.
While some parents may hesitate to promote the use of credit cards, especially for a student who has difficulty managing money, others may believe a credit card can provide a useful backup, especially in an emergency or for certain expenses, such as car rentals, plane fares, and railroad tickets.
Making the Grade
Ideally, college students should take charge of each semester’s spending. Life becomes much easier for parents when college students can manage their own finances. Indeed, there will be cause for celebration when your student “makes the grade” in personal financial management.