One “extracurricular” activity that every student should master while in college is personal money management. Typically, a student’s day-to-day spending is done on an improvised basis, meaning that overspending is often the norm rather than the exception.
It is estimated that during a school year the average college or university student will spend approximately $4,000 for books, supplies, transportation, and personal expenses (Trends in College Pricing—2009, The College Board). However, there is often room for economizing. The first place to look is at food and telephone calls. Difficulty may occur in controlling these expenses, especially if pizza is ordered regularly at 2 am and long-distance friends are simply a phone call away.
While many students may assume it costs less to live off campus than in a dorm, they may be in for a surprise. In college towns with a high dem and for off-campus housing, accommodations within walking distance of the campus may tend to be expensive. Some l andlords require a one-year lease—a period longer than the school year—thus, subleasing privileges should be included as part of an “economical” lease. However, off-campus students can save money by sharing housing and doing their own cooking.
Money Smarts 101
The following may serve as important steps toward helping your student underst and college finances:
1. Before your student leaves for college, sit down and have an open discussion of expectations—both your child’s and yours.
2. Consider providing a lump sum each semester, making it clear how long the money must last.
3. Explain when checks or money transfers can be expected, the amounts that will be received, and any rules concerning the use of funds.
Since most students rely on savings and checking accounts—regardless of whether they include parental funds, their own, or a combination of both—it is important for them to underst and how these accounts work. The ability to balance an account accurately and make needed corrections is especially critical.
Many undergraduates may keep most of their funds in hometown financial institutions. However, managing financial affairs long-distance can be difficult. Verifying an account balance quickly with an out-of-state bank can be both costly and time-consuming. So, it may be a good idea to keep a smaller account on campus.
While some parents may fear a credit card can give a student who has difficulty managing his or her affairs too much of a cushion, others find a credit card can provide a useful backup, especially in an emergency or for certain expenses. For instance, it can help with car rentals, plane fares, and railroad tickets. In addition, trying to get money to college students in different locations can be frustrating, and it is often impossible for anyone to cash personal checks away from home.
Making the Grade
Ideally, college students should take full charge of a semester’s spending. Life becomes much easier for parents when college-age children can manage their own finances, and the students will learn valuable life skills in the process.
This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116
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