If your child will soon be attending college, you might be concerned about how they’ll handle their finances and how much spending money they’ll need. Your child might have more financial obligations as a college student. Many students might overspend as a result, particularly in their first year of college.
According to the US, since 1981, college costs have increased more quickly than inflation. Occupational Employment Statistics. As a result, it can be challenging to calculate the amount of money you will need for college. Not to mention that costs can differ greatly depending on the college.
But how much spending cash is required for college? The average amount of spending money for a college student is $2,000 per year, or roughly $200 per month, although this figure depends on a variety of factors. Here are some recommendations and advice to consider when determining how much money to set aside and how you and your child should divide the cost.
Agree On How Spending Money Should Be Used
Scholarships, grants, and student loans are only intended to cover eligible educational costs if your child is eligible. The way that money is to be used must adhere to strict rules. The only expenses that can typically be covered by financial aid are tuition, fees, room and board, textbooks, and travel.
Financial aid doesn’t pay for extra expenses like the occasional trip to the movies or a late-night coffee run. Your child will therefore require some extra spending money of their own. Their location, school, and personal habits will determine how much they require.
Discuss your child’s college goals, academic and social plans, and spending habits with them before they leave for school. For instance, they will probably spend the majority of their spending money on those activities if they intend to play intramural sports or join a fraternity or sorority.
Calculating Financial Aid
Many students never actually pay the sticker prices for college, despite the fact that it can be quite expensive. For an estimate of the amount of federal aid, you will likely receive, use the FAFSA4caster tool on the website for the Free Application for Federal Student Aid. The amount of money you will need to raise on your own may be lessened as a result.
Federal Pell Grants, student loans, and the federal Work Study Program are all examples of federal student aid. According to the College Board, two-thirds of all undergraduate students receive financial aid. However, keep in mind that if you rely heavily on loans to fund your college education, you’ll probably graduate with a lot of debt.
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Understanding College Costs
Your lifestyle will have some bearing on how much money you’ll need. For instance, traveling to a nearby university from your parents’ home can help you save money on room and board, but you’ll miss out on the on-campus atmosphere. Due to the fact that many colleges and universities mandate that students live on campus and purchase meal plans, that isn’t always an option.
The average cost of attending school is something that schools are required to mention, but the actual cost may be higher or lower than that. You should consider transportation expenses as well as other incidentals like a cell phone, clothing, and returning home for breaks in addition to the usual costs like tuition, room, and board.
The amount you need to save can be lowered by taking a part-time job, which will also give you extra spending money for other expenses.
Discuss Who Is Responsible For Spending Money
Identify who will pay for your child’s college expenses and come to an agreement with them. You may want to give them some money each year if you can afford it, for them to use however they please. But be sure to establish clear boundaries; if your child requests more spending money for college than you provided, he or she will need to find a part-time job during the school year or work during the summer to make money.
It’s a good idea to establish some guidelines for using the spending allowance. For instance, you won’t replenish the fund if your child uses up the entire first month’s allowance at school. And if they accumulate debt, they are liable for repaying the fees incurred as well as any accumulated interest.
To keep track of your child’s finances and spending patterns, think about setting them up with a budgeting app like Mint or You Need a Budget.
Revisit Your Spending Money Budget At Least Once Per Year
In particular, after your child’s first year of college, review your college student’s spending plan at least once a year or once every semester. It’s possible that your child’s needs will change, necessitating adjustments.
You may be able to better prepare for the upcoming semester by examining your child’s experience. Together, they should go over their spending to identify their most frequent purchases, problems, and potential cost-saving measures. This will help them become more adept at managing their money.
If your child spent a lot of money at the coffee shop, for instance, it might be more cost-effective to buy a high-quality coffee maker for the dorm room for the following semester. Alternatively, you might be able to skip the meal plan the following year if you overspent on groceries or eating out. If your kid spent a lot of cash on new clothes, you might suggest that they consider visiting thrift stores, resale websites like Thred Up, or even clothing subscription services.
You can jointly determine how much spending money your child needs for college by having an honest discussion and creating enduring financial habits.
5 Ways A College Student Can Earn Spending Money
Talk to your child about how they can make up any shortfall if you don’t pay their entire monthly college allowance or if they want more spending money. Some options include:
- Getting a job on campus. Colleges typically employ students to work in labs, tutoring facilities, and dining halls on campus. Your child can work a job on campus that works around breaks and exam times and earn extra cash. Your child should go to the college’s career planning department to learn about the opportunities that are available.
- Locating a part-time job away from campus. If there aren’t many jobs available on campus, your child might have more success finding employment off campus. College students can find paid work from small businesses that need office help or from local retail and food service establishments that frequently employ college students. For part-time employment opportunities, your child can use Indeed and SnagAJob.
- Obtaining a side job. College students can make a great living from side jobs. They can choose how much (or how little) work they do, and they are free to take breaks during finals week or during the holidays. Popular side gigs for college students include:
- Delivering groceries for Instacart
- Dog walking on Rover
- Tutoring on TutorMe
- Graphic design on UpWork
- Care.com offers babysitting and home-sitting services.
- Selling unused items. Your child can turn unwanted clothes, electronics, books, collectibles, or outdated toys into cash by selling them online with Poshmark or Gazelle.
- Working over the summer. Students with demanding classwork may not be able to work during the academic year. They can concentrate on working during the summer breaks to increase their disposable income. Summer jobs for college students can include:
- Camp counselors
- Retail associates
- Foodservice and hospitality
- Professional internships
College can be expensive, even with scholarships and financial aid, so start saving now! In spite of this, attending college is a worthwhile investment because, according to a recent study, people with college degrees who work full-time make $17,500 more annually than those who only have a high school diploma.
Learning how to budget as a college student will enable them to keep tabs on their spending, spot areas where they can make savings, and set aside money for the future.