It's always exciting to help your teen get ready for college for the first time. There are tons of things to do like finding roommates, visiting the pediatrician, and shopping. While many parents look forward to such days, money remains a big challenge. Taking a child through college can be an expensive undertaking. And it's not just about tuition fees. Even college students who reside in dorms and follow meal plans need a budget for discretionary spending. And college may be the first place for many teens to manage money on their own. Experts warn that parents who don't help their teens budget for college risk running into money challenges and raising kids who aren't smart financially. We don't want that to happen to you and your loved ones. So, in this post, we share creative ways to help your teen budget, and later offer tips to help them stick to it.
Budgeting Tips for Teens Joining College
Start With Income
While in college, your child may be working part-time to afford everyday expenses or even help pay for college. They may also be receiving money from scholarships, or parents. It's wise to know how much money they will be receiving before budgeting. It forms the foundation for how much they can afford to spend. If the amount varies, it's better to work with a lower amount to reduce the chances of overspending.
Identify and List All Monthly Expenses in Your Teen Budget
Now that you know how much money your teen will be receiving while in college, it's time to identify all expenses. The aim here is to know where the money goes. Some of the most common college-related expenses include accommodation, food, school supplies, phone, internet, transportation, utilities, and others such as apparel, entertainment, and gifts.
Although savings aren't necessarily listed as an expense, it can be wise to include them. This will help your teenagers remember to save money for future goals.
Identify and List All Monthly Expenses in Your Teen Budget
After identifying and listing all college expenses, organize them into fixed and variable categories.
Help your teen understand that fixed expenses are bills they can't avoid paying. Some of them include rent, textbooks, insurance, and transportation.
Variable expenses, on the other hand, are more flexible. They cover wants such as entertainment, gym memberships, dining out, and travel expenses.
Let your teen know that they will always cancel variable expenses if their income decreases or when they want to save more money.
Make Adjustments
The final step when helping your teen budget for college is to make sure the numbers work out. Determine whether they have enough money to cover all their expenses.
If they can't afford it, make adjustments. For example, find ways to reduce costs or make more money. Advise them to get part-time jobs, start side hustles, and reduce the amount of money spent on variable expenses.
How to Help Keep College Teens on a Budget
As mentioned earlier, creating a budget is one of the best ways to raise financially smart kids. But that's just half the battle.
To win the war, your teen should master the art of living on a budget. To help your teen learn to do that in college, here are tips to consider:
Give Incentives to Save Money
Encouraging your teens to save money is one of the surest ways to keep them on a budget. And that takes more than just words.
Many experts recommend offering to match any money a teen saves. For instance, if they pack lunch for two weeks instead of buying sandwiches at a store, promise to match the money saved.
Gradually Shift Responsibility
Over time, it's wise to let your teen make financial decisions. Generally, many college students live in dorms during their freshman years. After that, many want to transition to something else like eating out and living off-campus.
Keep the Teen Budget for College
Give teens room to figure out how to spend their money. They may make mistakes and spend money faster than expected, but that's part of learning. It is better to make mistakes now and learn than to lose hundreds of thousands of dollars later. Good luck!