Help The College-Bound Create a Budget

Admittedly, creating a budget probably isn’t at the top of the list of things your college-bound student is thinking about right now. It may not even be at the top of your list. Yet by taking a little time now to work together, you’ll be doing more than preventing panicked phone calls in the months ahead; you’ll be helping your student learn a valuable life skill.

Start by approaching the topic as a conversation rather than a lecture. Be positive and instill confidence by letting your student know that he or she already has the skills to manage a budget and the maturity to make responsible financial decisions. Share personal experiences if it makes sense and let them know you’re there to help.

Develop a list of every source of income your student will have each month, then list all the monthly expenses like food, clothes, entertainment, laundry, gas, insurance, supplies, rent and utilities (if applicable), etc. Don’t include items that are paid for each semester, like tuition, books or dorm room furnishings. If the total monthly expenses are more than the total monthly income, help your student decide where to trim costs. Chances are the $100 for entertainment you think is excessive is a responsibly conservative estimate from an 18-year-old. By letting them make the decision, they’ll probably work harder to stay within the budgeted amount or be more willing to readjust it going forward.

Try to work in a savings strategy. There will be unplanned expenses as well as major recurring ones (like tuition, books or rent deposits) next semester. By including some sort of savings as part of the monthly budget, you’ll help your student get into the habit of saving early if they aren’t already.

Be practical. Let your student know that maintaining a budget is critical to its success, but that budgets are also meant to be flexible. Promise each other that you’ll revisit the budget regularly to discuss what’s working well and what needs to be changed.

You may also want to consider using online tools that help manage cash flow. FinanceWorks™, for instance, is a free and secure online personal financial management tool that can track spending, create budgets, organize bills and make payments in one place. Other products and services designed with college-age students in mind are also available. Ask your financial advisor for details.