Budgeting 101 for College Students and Their Parents

In some ways budgeting for college students should be easy. Considering most of the major expenses that appear on a personal budget: housing, health care, transportation, food and utilities are already accounted for in room and board and tuition costs, the rest should be as simple as Basket Weaving 101. However, first-year students who have never had a job or been on their own may be naively underwhelmed at the prospect of making their money last over a semester or a year.

Why budget?

Your son or daughter is growing up and it's time he or she learned about how to balance income and expenses. It's not something that most students are exposed to in high school, even if they have had jobs and a checking account. Outlining the budget with your college-bound student emphasizes that money is finite and limited. By setting spending guidelines before the student heads off to campus, the student will be more aware of limitations and will be more cautious about money.

College student income for the budget

Consider the budget a starting point for student spending. Unexpected expenses (an online computer back-up service through the college, for example) will crop up and percentages may need to be adjusted throughout the school year.

The first part of a student budget lists all forms of income:
- summer savings
- income from a job
- money from student loans, grants, scholarships and financial aid
- money from parents

College student expenses:

These are fixed expenses that will eat up most of the budget. Percentages are given as one sample, adjust the figures to match your student's tuition and room and board.

- tuition and fees (30%) - It could be anywhere from 20% to 60%.
- room and board (30%) - At some private colleges room and board is equivalent or even more than the tuition.
- textbooks and supplies (15%)
- phone bill (5%)
- seasonal clothing and footwear (10%) - It's better to consider this a fixed amount, and the shopping should be done before school starts.

Flexible expenses

The rest of the expenses are the ones the college student and parents need to budget carefully for the semester or the year.

Food - 5% This is in addition to the dining hall fee already paid to the school. Students need to carefully budget weekly money for snacks, food to cook in the dorm kitchen, take out and meal at restaurants.
Entertainment - 5%

Commuter Budget

Students will not have to worry about some typical parts of a budget unless living off-campus, including Internet, electricity and heating oil. If the student has an apartment, the College Board estimates living expenses as:

47% for housing, food, utilities
18% for transportation (car payments, insurance, gas, parking fees, registration, maintenance)
35% miscellaneous

Managing the money

- Save on transportation costs by using public transportation.
- Set students up with a debit, not a credit card to limit frivolous spending.
- Check in with students weekly (especially if you're paying the bills) to see if spending is on track. It may be awkward at first, but it's better to openly and regularly discuss spending with your college student than to receive the "Mom, I need money right now" phone call later on.

Sources

College Student Budget Planner, Women's Finance
"Cut College Costs," U.S. News & World Report, on Yahoo!
"Living Expense Budget 2011," College Board
Personal experience