This time of year, many parents find themselves navigating a whirlwind of emotions and logistics as their children make their college commitments. The excitement and pride in their child’s academic achievements are tempered by the daunting reality of financial planning. As they delve into the real financial details, parents meticulously review tuition fees, accommodation costs, financial aid packages, and scholarships.
Now is the opportune time to sit down and have an open discussion of financial expectations before your son or daughter heads off to college.
One area of the budget that many may overlook is additional supplies and personal expenses. It’s important to consider the unexpected course supplies as well as late night pizzas and Uber rides that can quickly add up. Together, determine an amount for each semester, explain when funds will be available, and any rules governing the use of the money.
Whether students rely on parental subsidy, use their own money, or combine funds, it is important for them to understand basic budgeting and tracking expenses. Help them understand the importance of prioritizing needs over wants and setting aside money for club dues/activities or spring break travel.
While many students might think that it costs less to live off campus than in a dorm, they may be wrong. In college towns with high demand for off-campus housing, accommodations within walking distance of the campus tend to be expensive. Some landlords may require a one-year lease—a period longer than the school year—so subleasing privileges need to be part of an “economic” discussion. In addition, as an off-campus student, they need the skills to budget for utilities, groceries, and sharing housing costs.
While some parents may hesitate to promote the use of credit cards, others feel they can be useful for tracking expenses. It can also be an opportunity to teach them about interest rates, fees, and the importance of paying off the balance in full each month. Discuss the impact of credit scores on their financial future and how to build and maintain good credit.
Another important aspect is discussing expectations to supplement their budget. Do you want to encourage them to seek out on-campus or off-campus employment opportunities? Or perhaps paid vs unpaid internships that align with their interests and career goals?
At Biondo Investment Advisors, we believe in preparing the next generation to be fiscally responsible and hope this guidance is helpful. The process embraces open family discussions, and often, some difficult decisions, all undertaken to equip your child with financial skills and knowledge. You will be setting them up for a successful college experience while also fostering their financial independence.
