|
|
Student Expenses
By Gary Foreman
Question: I have been desperately searching for information regarding
budgets for college student spending. Our daughter needs some reigning
in and I am trying to find some guidelines as to what is reasonable in
this day and age. ~ Becky
Answer: Becky faces a common problem. Most students entering college
have limited financial education. And, moving out of the house for the
first time can create problems.
The actual costs of college, like tuition and fees, are generally known.
Usually it's the 'living expenses' and other incidental costs that throw
budgets out of whack.
Becky's daughter's college probably has some 'cost of attendance'
guidelines that are meant to provide an idea of how much students will
spend while attending school. For instance, the University of Florida
figures that a student living on campus will spend $5,800 on housing and
meals and a total of $12,140 during fall and spring semesters. Rutgers
estimates $1,700 for clothing, toiletries and spending money.
Becky and her daughter have already probably made some decisions that
will affect her budget. For instance, the University of Arizona
estimates that the difference between living at home and living on
campus is $4,580.
Unfortunately, many school estimates are too low. Whether the schools
purposely keep the costs low to look attractive or they just
underestimate what students spend, Becky shouldn't use the estimate as
final word on what her daughter should spend.
The cost of books is often underestimated. Some suggest that a student
can expect to spend twice the estimate on textbooks. In figuring
transportation costs, most schools assume two trips home per year. In
practice, many students come home much more frequently. Fortunately,
both of these categories are easy to track.
So what about everything else? There are a number of different things
that could help. The first thing is to remember that what Becky teaches
her daughter now will affect the rest of her life.
In the old days students didn't spend money that they didn't have. So
the expenses of a college student were limited by how much money they
had.
Clearly student loans and credit cards have changed the equation. The
average student runs up nearly $19,000 in debt during college. By the
time they're seniors nearly one third are carrying credit card balances
of $3,000 or more.
Many graduates are finding their options limited by their debts. They're
forced to delay new cars, expected weddings, new homes and starting a
family. Grad schools and employers look at a graduate's credit score. So
ignoring the debt isn't an option.
Ideally, Becky's daughter would get a credit card during college and use
it wisely. By the time she graduated she would have created a good
credit history.
Becky should monitor her daughter's use of credit. Depending on their
relationship, Becky might want to have a duplicate copy of the monthly
statement sent directly to her.
If her daughter overuses a credit card, Becky might want to consider a
prepaid credit card. That limits spending to what Becky prepays.
And, don't forget, if a student is 18, a parent's permission isn't
required to get a credit card. So they could have a card that you don't
even know about.
Becky's tone suggests that her daughter would rather continue her
current spending patterns. That's understandable, but whatever patterns
she sets up now will probably last a lifetime.
Usually the problem areas are food and entertainment. But Becky won't
find a black and white answer as to how much her daughter should spend.
Just as each family needs to create their own budget, each student's
needs are different.
It's easy to see why food is a problem. Compared to cooking for one or
visiting the student cafeteria, going out to a nearby restaurant or
calling in for pizza will always look better to a student. But that can
add $5 to the cost of every meal. Becky's daughter can quickly blow an
extra $100. To avoid problems they'll need to decide how many 'premium'
meals our student can afford.
Becky's daughter will also have plenty of opportunities to spend money
on entertainment. There's always someone who wants to take a break and
go to a movie or find some other fun. And even your cheapo university
theatre can swallow a $10 bill if popcorn is involved!
Chances are that Becky and her daughter have already handled major items
like living on or off campus and how often the daughter should come
home. Ideally they'll agree on how much should be allocated for things
like food, entertainment and clothing. Then our favorite student can use
her budget to keep control of expenses. And, in the process, develop
habits that will serve her well for years.
About the Author
Gary Foreman is a former financial planner who currently edits The
Dollar Stretcher website
www.stretcher.com
where you'll find thousands of articles to help you stretch your day and
your dollar.
|
|
