Before You Begin
Budgeting puts you and the student in greater control of his or her finances. Keep in mind these guidelines when sitting down with the student and budgeting:
- Above all, be realistic about your undergraduate’s needs; he or she still needs to eat.
- Give him or her a bit of maneuvering room.
- Just the facts--be careful about getting too detailed. This should be a snapshot of his or her financial situation, not a detailed look at every single possible expense.
- Revisit the budget regularly. A budget is only as effective as its last update, so make sure he or she keeps it current.
- Balance the checkbook. This may seem basic, but be sure the student knows how to balance a checkbook. Unrecorded expenses have the potential to wreak havoc on a budget. Make sure they track all ATM withdrawals and debit card purchases in the register.
- Also, be sure the student knows how to write a check. Don’t assume he or she knows. Many parents are surprised to find checks returned that have been paid to the order of "school books" or "lawn chairs" and not the store.
Getting Started
You and your undergraduate may use this list as a guide to developing your own budget worksheet:
- Resources. Begin by identifying your undergraduate’s resources or income. This could be salary from a part-time or campus job, a monthly stipend, savings, or gifts. Add all identified resources to determine the amount of money the student will have to work with. This could be done on a monthly or yearly basis.
- Expenses. Now, identify all reasons for expenses such as rent and utilities, transportation, entertainment, and personal expenses. Again, total the amount of expenses for the month, year, or both.
- Discretionary Income. This is the amount of money left after you’ve subtracted expenses from resources, or income. This money can be used for additional expenses not allotted in the budget. Or, your undergraduate can save this money for a rainy day or when they graduate. If you find the discretionary income is on the other side of the equation and is minus, you and your child should revisit the listed expenses and see if something can be reduced or determine if you and/or the student will need to find additional funding-maybe from a job or loan.
What About Your Financial Institution?
Developing a budget is a critical component in putting your undergraduate on the road to financial success. As a parent, you also can look to your financial institution for some help in that department. This is an opportune time to teach the student healthy financial habits for life, and your bank can provide you with information on student loans, identity theft, responsible credit card use, and other financial concerns.
Your financial institution also should provide some assistance on how your child can financially transition to college. Some banks offer online banking, debit cards, and ATM access with no fees, which can make your child’s move to college much smoother. In addition to helping your undergraduate develop a budget, this may be the time to make sure your financial institution can meet your student’s financial needs in this evolving time. TPW