Mention the college freshman budget and you get a wide variety of responses. Most students really have no clue, and no plan to do one. Some think this is something for adults. Others know they should be doing it but aren’t sure how to start. Who’s left with the fallout of these responses – the parents, in most cases.
College is, for many, the first place that monetary responsibility is required. Mom or Dad won’t be around to tell you what to spend your money on. This newfound freedom can quickly spiral out of control. That’s why your son or daughter needs a budget.
That word makes people cringe. But it shouldn’t. A budget is simply a plan for your money. When you have a plan, your money seems to go further. The college freshman budget is no different.
I’m going to assume that college itself is paid for. I know that’s a huge assumption but is one that I’ll make to level the playing field. When I say this, I mean tuition, books, fees, room and board. They can go to school, have a place to stay, and are being fed. I’m also going to assume that the student is unmarried and has no kids. Thus, their only financial obligations lie with themselves.
To prepare a budget, regardless of age, priorities need to be established. This separates the needs from the wants. All possible expenditures need to be listed then categorized by need or want. Then, the list needs to be reordered with needs first, then wants. Needs are to be provided for first, just like in real life.
Let’s begin with necessities. I’ll classify necessities as required or unavoidable expenses. In Dave Ramsey world, he calls these the four walls – the basic building blocks of the house. Here are some of the big items that fall into necessities (again, beyond the basic college expenses):
- Car Gas
- Car Maintenance
- Car Insurance
- Car Registration
- Cell Phone Bill
- Medical Co-Payments
- Fraternity/Sorority Dues
As for wants, there will be a lot of those. Entertainment opportunities are plentiful. This is an area where the budget can quickly get away from your son or daughter. Without the college freshman budget, there is nothing to keep them from saying yes to all of these things. Here are just a few items:
- Sports Tickets
- Restaurants and Dining Out
- Weekend Trips
- Summer Study Abroad
- Social Events
- Unnecessary Clothing
Those expenses that don’t occur at least monthly can blow a budget. For those items, an amount needs to be saved each month (or each payday) to plan for them.
We’ve been focusing on the spending side. Remember that a budget can also be balanced by adding to the income side. This means work. In my opinion, a college student, even a freshman, can work and go to school. It comes down to managing time effectively. Check out my article “Time Management For The College Student.” And here’s a little secret – the more your student works, the less time they have for social life. This manages the expense side of the budget as well.
Never let credit cards fill the shortcomings in the college freshman budget. Though credit card issuers have new rules for college, these still make their way on campus. It is a dangerous precedent to begin covering expenses with credit cards. These kids have little to no income so they don’t need a way to get into financial trouble.
I believe that the well-maintained college freshman budget can make a huge impact on your student’s freshman year. When a young adult learns how to take control over one area of their life, it often translates into the other areas. And, when one area is out of control, it takes the others along for the ride. Teach your child how to do this and talk to them regularly about it.
Application Question – Does your son or daughter realize these upcoming expenses? Have you talked with them about a budget? What is the first step you can take to introduce this topic to them?
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