Money Smart Kids
A College Checklist for Parents
You've taught your kid how to do his own laundry. Now it's time to sit down and talk money.
By Janet Bodnar, Editor, Kiplinger's Personal Finance
August 20, 2008
Kudos to the dad who recently e-mailed my column on six money skills every kid needs to his college-bound daughter with this thoughtful note: "Katie, please look over this article and let's get together (over sushi?) to discuss your readiness for financial management as you head off to college. Love, Dad"
While Katie and her dad peruse the sushi menu, here are a few other things they (and other parents and kids) can tick off their college checklist:
Agree on who's
going to cover which expenses. You'll probably take care of the
campus meal plan, but the kids should pay for their own pizza and beer.
Last year we paid for my freshman son's travel home from the University
of Michigan. When he visited friends at the University of South
Carolina, it was on his dime.
Note: We paid for books, too, which at $800 to $1,000 per year can be a major hit. Our son saved us a bundle by buying used books through the Michigan network. And there are a slew of used-book sites online -- BigWords.com, BookFinder.com, CampusBookSwap.com and Half.com, to name a few. (See more economical ways to cover other college expenses.)
Discuss where
the money's going to come from. The ideal is to have kids pay for
their expenses out of their summer earnings, which puts an automatic
limit on how much they can spend.
Realistically, figure on $2,000 to $3,000 in expenses for the year (not counting books); check with your child's school. My son got by on a frugal $1,500, but one of his friends spent more than $4,000 on nights out in pricey Georgetown in downtown D.C. (and got a part-time job to help pay for it).
Have doubts about your child's ability to manage a budget of several thousand dollars? Dole out the money on a monthly basis at first. That way, if your child runs out of cash early, he or she will have to wait only a couple of weeks to get the next installment.
Anticipate
surprise outlays. If your child decides to join a sorority or
fraternity, who will pay the $1,000-plus in initiation fees? In the case
of one of my son's friends, his parents advanced him the $1,600 it cost
to join a frat at the University of Virginia, and then had him repay
them out of his earnings the following summer.
Keep a tally
of expenses for the first month or so. Kids can monitor
their outlays online, save ATM receipts, even stick Post-it notes
on their desk to track cash. As one student told me, "You may not spend
less, but at least you'll know where the money went."
Cover the
basics of credit. Tell your kids that a credit card is not free
money, and that making the minimum payment will keep them in hock
forever. Research shows that just talking to college-age kids about
credit makes it less likely that they'll get a credit card or run up a
big balance.
And college freshmen can get by with a checking account and a debit card. Once they prove that they can be trusted to pay their expenses without overdrawing their account, they're mature enough to apply for a credit card.
One more thing: Dad, the tab for Katie's sushi is on you.
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Reader Comments (1)
Posted by: Evan Perry at 08/20/2008 03:09:47 PM
...my school wanted $250 for one of my text books and on BIGWORDS.com it was only 15 dollars!