Yahoo Finance Budget Planning & Other Tips for Supporting a College-Bound Kid
College tuition has always been a comparatively huge expense for parents to consider. Within the ongoing financial environment, parents may be looking for ways to optimize their spending and make the most of their savings.
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There are a lot of college expenses to consider beyond the tuition and room and board, including travel, dining, and clothing. That means discussing finances and financial planning with kids is crucial.
The first thing to do is fill out the FAFSA, or Free Application for Federal Student Aid. This detailed form is submitted to apply for college loans and grants. It’s recommended for all parents, even if they don’t think they’d qualify. If the student plans on working part-time, they can be awarded a work-study after filling out the FAFSA, which will guarantee them the federal minimum wage during positions like tutoring and research assisting. The college itself might also offer its own scholarships or grants.
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Once tuition and housing are handled, next comes discussing who is going to pay for items like clothing, sundries and going out expenses. One option parents could consider is a monthly allowance to account for the expenses. However, having the student create their own source of income including applying for a part-time job is a great way to teach fiscal responsibility.
Deciding on how to distribute discretionary funds is another important discussion to have. Parents can open a checking account for their child, which can even be connected to their own accounts, which helps monitor spending. Creating a separate joint account is another option, especially if you’re on a tight budget and any overdraft could put your credit in jeopardy. Opening a credit card or adding a child as a user to a current card can be a useful option, but without practical budgeting experience, it could put parents in deeper debt than they can manage.
For budgeting purposes, there is the helpful 50/30/20 rule which splits up what you need to spend on rent, bills, groceries and more. Another popular trend, thanks to TikTok is cash stuffing which uses cash instead of credit to manage expenses, including an envelope for discretionary spending. Learning to say no is another trendy budgeting tool. Loud budgeting may be new, but it’s never too early to learn to stay in and eat ramen.
There are also a few quick tips to limit spending. When purchasing books, seek out used and digital copies which usually cost less. And don’t be shy to price shop textbooks — there are a wealth of private sellers willing to sell cheap and ship fast. Like books, school supplies might end up being cheaper off campus. The same goes for shelf staple groceries and personal items. Learning the local bus route or finding a friend with a car can save big bucks over four years.
Whatever methods parents choose, having the conversation is the best first step to financially supporting your college-bound kid.
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