How to Budget WITH Your Student & Change Your Estimated College Cost
Posted 06 Nov, 2009
Let’s face it: even if you can get a tuition discount and figure out a clever book-buying cost- saving-strategy, college is expensive. It’s thousands of dollars. The only way to offset costs is to be creative, and most importantly, to get your student involved in the budgeting.
Understanding YOUR Estimated Cost
One of the first things most parents do when helping their child consider a school is to look at the projected cost of attendance the colleges provide. This gives you a list of potential costs, including tuition, fees, room and board, travel and other miscellaneous expenses.
While the colleges feel this is a reasonable average cost for the average student, there is no reason that the travel and other personal expenses need to add up to such a high number–in fact, this is one of the areas in which you and your child have the most control.
Wants and Needs
Most students out on their own for the first time have trouble distinguishing between “wants” and “needs.” Take the example reported by the Georgetown Voice blog, of a second year Georgetown student who decided he would run an ad to hire a personal assistant!
Preferring not to pick up his own dry cleaning or drive himself to work, this student set up a job listing on the school website requiring that a fellow student serve as his PA. Some of the actual job responsibilities include (and I quote):
- Organize closet
- make bed
- Drop off / pick up dry cleaning
- Drop me off / pick me up from work
- Do laundry
- Fill up gas tank
- bring car for servicing
- schedule appointment for haircut
- Pay parking tickets
- manage electronic accounts
- shopping and running errands
Obviously this is an extreme (but real!) example, but it illustrates my point of the want versus need discrepancy–the $12/hr spent on this student’s assistant could probably be redirected to cover other non-discretionary costs.
Building a Budget–Together
Building a successful, working budget with your student might seem challenging, but working together can save you both a lot of money and worry–and hopefully build some great adult rapport between you. Here are a few steps to get started.
- Write it Out. You may be able to crunch the numbers in your head, but your student needs to see just how quickly a daily coffee and weekly trips to the movies can add up. Make a line-item spreadsheet of the “need” and “want” costs–from rent, insurance, tuition, textbooks and groceries (needs) to the extras (wants) like eating out and downloading iTunes mp3s.
Don’t forget to figure in a monthly amount for bigger, less frequent expenses like car registration, trips home for holidays, and emergency purchases or costs such as car repair or buying a new computer when an old one dies.
- Offer Incentive. One of the best ways to encourage your student to stick to the budget is to offer an incentive. This can be anything you feel will help encourage your student, and it doesn’t have to be in the form of money. You and your student will be able to come up with an idea together of how your child can keep motivated to save even when you aren’t around to deliver a reminder.
- Pick and Choose. Go through your student’s typical spending as of this month, and discuss with him or her how to set a personal allowance for the “wants” category–the one where little expenses add up to big bills over time. Explain that he or she should keep monthly spending on “wants” within a predetermined amount, and discuss what each of you thinks is “reasonable.”
- Divvy Up the Costs. You don’t need to foot the whole bill for college. In fact, it is probably better for your student if you don’t. Studies have shown that students who work part time (less than 15 hrs/week) while attending school tend to do better in their studies! Students who work learn time management, gain experience for their CV, and learn to feel the sense of satisfacation of being able to help support themselves. For those that would find it difficult to work while in school at this point, students can cover their portion of the costs by working during the summer. (My son is responsible for earning at least $3,000 during the summer for his spending money during the school year.)
(Bonus: Divvying up the costs also encourages students to work harder on their financial aid and scholarship applications if you count that money as part of their contribution to the budget.)
Talk to your student about how you will divide the budget. What will you pay for, and what will your student cover?
All the best,
Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.
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