Create a Budget
Incorporate all income and expenses besides tuition, room and board. To start, include among the different line items any rent if your child is living off campus; snacks and meals not covered by a meal plan; entertainment; travel for any trips home or abroad; dues for any clubs, fraternities or sororities; books; mobile phone charges; clothing and if they have a car, money for gas, parking and insurance.
Experts recommend setting a monthly budget so that your child can check their spending weekly. Your child needs to know if they’re on track or overspending, and websites and mobile apps can help make this process easy.
Depending on the state and whether your child is under the age of 18, you may have to be on the account with your child. Once your child is of age, they can apply for and open their own account.
Avoid ATM fees by using a local bank or one that reimburses for ATM fees, and look for accounts that waive monthly maintenance fees, experts advise. Also, link your child’s account to yours so you can transfer money monthly or as needed.
Decide on Cash Versus Credit
If your child has the discipline, credit cards can help build credit and work to their advantage, otherwise they become an excuse to consume more. Cash can help your child control their spending since when it’s gone, it’s gone.
Parents should explain how credit works and the difference between credit and debit cards, as well as the ramifications of not paying off a credit card.
When they first apply, unless your child is 18 years or older and has their own income, you’ll have to cosign their credit card or add them as an authorized user on yours. Experts advise setting clear ground rules for what the credit card can be used for. Also, keep spending limits low at a few hundred dollars to prevent owing what you can’t afford if they overspend.
Have Regular Check-Ins
Expect road bumps as your child learns to manage their finances. There will be months that they run out of money and that’s to be expected. You want to get them used to the idea of managing to a certain amount of money each month so they don’t come back to you and ask for more. You eventually want your kids to tell you how much they need and then make them live by it.