Aug. 24, 2010 -- College means more independence for many students, but it also means more financial responsibility. Before your teen goes off to college for the first time, it's important to talk about spending and budgeting.
Paying for a college education means more than just covering tuition costs. "Good Morning America" financial contributor Mellody Hobson recommends setting up a budget with your kids ahead of time, so college-bound kids know exactly where their money is going and what money is coming in.
Making Your Budget
The first step to creating a college budget is considering expenses. There are many costs to take into account, including room and board or rent, books and supplies, food and groceries, transportation, personal care (cosmetics, toiletries, prescription medications, etc.) and more. Don't forget to set aside funds for entertainment -- things like dining out, going to the movies, or big events like birthday celebrations or travel plans.
Next, figure out your child's income. This includes any income from a school job, financial aid, scholarships, student loans, and any support or monthly allowances from parents.
Parents should make it clear that income and expenses need to balance.
CLICK HERE for a printable budget worksheet for college students.
Here's are guidelines for how much students at public and private colleges spend on average each year.
Estimated Annual College Costs at a 4-Year Public University:
In-State Resident Cost
Tuition & Fees: $6,185
Room & Board: $7,404
Other Expenses: $1,848
Total Annual Cost: $17,336
Estimate Annual College Costs at a 4-Year Private University:
On-Campus Resident Cost
Tuition & Fees: $23,712
Room & Board: $8,595
Other Expenses: $1,311
Total Annual Cost: $35,374
*Provided by SayStudent.com and based on data from the 2007 College Board Trends in Higher Education
Staying on Track
Once you have a budget in place, to help stay on track, SayStudent.com also has a printable worksheet where you can record your daily expenses. Click here for the spending sheet.
For the digitally-savvy, websites like Mint.com will manage your budget for you. It's a user-friendly site and can be linked to kids' bank and credit card accounts, making it even easier to keep track of things.
Freshman Finances 101 with Mellody Hobson
Most universities have credit unions that are usually free to join. This could be a great choice if you do not like any of the banking options on campus. Many credit unions have free checking accounts with no minimums, and low or no fees for other services.
Try to find a bank on-campus. This will ensure that you are not incurring unnecessary ATM usage fees at other banks, and if you run into problems with your account it will be much easier for you to talk to a live person.
Make sure that your college student keeps an emergency fund so they can cover any unexpected items that may come up and you are not relying on credit to make any hurried purchases.
Many colleges offer free legal services, so if you need them, make sure you take advantage of them as soon as possible. This could save you a lot of headaches and expenses later. Check with your resident advisor or student life center to see what services are offered.