If you're heading off to college this fall, or you're the parent of a soon-to-be college student, you probably already have a lengthy to-do list. But one of the most important things you can do before the semester begins is to get on the same page when it comes to money and paying for college.
According to the College Board's Annual Survey of Colleges 2015-16, an out-of-state student living on campus at a public four-year college can expect to pay almost $15,000 for room and board, books, transportation, and other expenses, on top of an average $24,000 in tuition fees. This is why creating a budget (and sticking to it) is vital.
Here are five tips to help students keep their college expenses in check.
Who will be responsible for college living costs—the student or the parent? What about tuition and fees? It's a good idea to review all expected costs, agree who will pay for what, and set limits on spending early on. You can always adjust the plan and change the balance of financial responsibility after the first year.
Angela Jackson, a mother of three based in Texas, offers some advice: "I've had three children at college, and each time our approach has changed. With our first born, we had a very laid-back, ad hoc approach. We'd just provide him with money when he said he needed it, but over time we adjusted this dramatically. By the time our third child left home, we had a definitive plan in place, including spreadsheets that clearly spelled out what we would pay and when. Needless to say, this was much more successful and less stressful for both parties."
Take a look at the terms and conditions on various school activities and fees before registration. Can meal plans be changed mid-year for students who end up never eating at the dining hall, so you're not spending money on groceries on top of a monthly fee? Before splurging on appliances or decor, be sure to check the dorm policy to ensure there aren't any restrictions on the type of small appliances students can bring, or that roommates aren't going to double up on expensive items.
If you're offering your college-bound child financial support, you may want to consider setting up a joint bank account to deposit a weekly or monthly allowance to be used for day-to-day living expenses. Just don't fall into the trap of replenishing the account every time it's overdrawn. If it's a struggle to survive on the amount you've agreed, it may be time for your child to reevaluate spending habits or look for a part-time job. When choosing a bank for a new account, look for one that is close to the campus to avoid any potential out-of-network ATM fees.
Before taking out a credit card, students should consider whether it fits with their lifestyle and spending habits. If it does, and they feel they can manage one responsibly, using a credit card and paying off the balance consistently is one way to help build a healthy credit history. This will be important after graduation when it could be time to buy a car or rent an apartment. Some credit cards also allow users to earn rewards points on their everyday spending, which they can then put toward dining, entertainment, and shopping.
For more tips on healthy credit post-graduation, check out 5 Ways to Start to Build Credit After College.
There are a lot of helpful apps* available to help students manage their money and keep their spending in check, whether it's a bank app to help keep track of spending on the go or a budgeting app to help teach good money management early on.
You can also send and receive money via an app, which Tara Evans, a law student from Florida, has found to be incredibly useful. "My roommate and I use a mobile payment app that allows us to make transfers for everything from rent to takeout and taxis," she says. "It's linked to my bank account and is much easier than maintaining a spreadsheet of all our shared costs or running to the ATM every time a bill arrives."
For more tips on how to manage spending and make smart financial choices, check out 7 Steps to De-Stress and Master Your Financial Health.