{"id":1535,"date":"2023-10-10T15:59:39","date_gmt":"2023-10-10T15:59:39","guid":{"rendered":"https:\/\/first-exchange-bank.flywheelsites.com\/?p=1535"},"modified":"2024-03-18T13:08:47","modified_gmt":"2024-03-18T13:08:47","slug":"helping-your-college-student-with-their-finances","status":"publish","type":"post","link":"https:\/\/www.firstexchangebank.com\/helping-your-college-student-with-their-finances\/","title":{"rendered":"Helping Your College Student With Their Finances"},"content":{"rendered":"

West Virginia has become a destination for higher education. In fact, we rank\u00a0fourth in the US<\/a>\u00a0for number of colleges per person, with nearly 8% of our residents being students. It\u2019s no wonder with Morgantown\u2019s own world-renowned institute, West Virginia University, home to almost\u00a030,000<\/a> students alone.<\/p>\n

As a parent or guardian of a current or soon-to-be college student, you will face a lot of difficult financial decisions, and determining how you and your student can afford\u00a0rising tuition and living costs<\/a>\u00a0can make for trying times. But these years are also key to helping your student develop smart financial habits, ones that will help them for years to come as they seek out their first major jobs and set out on their own. In this post we\u2019ll provide some tips and advice on how you can help your student navigate these crucial years, like opening a student bank account and budgeting for expenses, while avoiding some common pitfalls that can create hurdles to their future success after graduation. Keep reading to learn more about how you can help prepare your student for a smooth transition to independence and a prosperous financial future!<\/p>\n

Budgeting Tips for College Students<\/h2>\n

Many college students will be managing their own finances for the first time in their lives. Understanding the concept of financial balance\u2014that money coming in should be greater than money going out\u2014is often easier said than done. It\u2019s a good idea to help your college student create a workable and accurate budget, even if you will be helping them with expenses while they\u2019re in school.<\/p>\n

Working together setting a budget will also give you a better idea of what your college student is dealing with in terms of debt and financial strain, which can help you guide them to make better choices, while alleviating tensions based on unrealistic expectations. Below you will find a few important things to do with your student to ensure that they can maintain that crucial financial balance.<\/p>\n

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Determine Who Will Pay for What Expenses<\/h2>\n

You may already have some kind of agreement in place about what your contribution to your student\u2019s education will be. According to the\u00a0Institute for Social Research<\/a>\u00a0at the University of Michigan, more than 60% of young adults aged 19-22 receive help from their families, with an average annual amount of $7,500. The amount you are willing and able to contribute, especially toward expenses outside of tuition, can be a difficult number to determine. And even if you think you found the perfect number, it might end up changing once you see their actual budget, after they score a lucrative summer job, or an unforeseen event or expense arises.<\/p>\n

To help you figure out how to best divvy up expenses, wait until all financial aid information is available and a rough monthly budget is calculated. Then revisit your contribution every so often, based on your students needs, performance, and your ability to assist them. The\u00a0Collegiate Parent<\/a>\u00a0interviewed several parents to learn about their systems for assisting their children in college. Some parents considered college to be the \u201cjob,\u201d covering their student\u2019s expenses, while others gave a monthly allowance of about $200, only when their student didn\u2019t earn enough themselves to foot the bill for their own expenses. Ultimately, be clear about what your contribution will be, but don\u2019t be afraid to revisit that number if circumstances change.<\/p>\n

Create a Budget Together<\/h2>\n

Ordinarily, budgets should follow what is sometimes called the 50\/20\/30 Budget Rule. As\u00a0Investopedia<\/em>\u00a0explains, \u201cThe basic rule is to divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings.\u201d However, for a college student, who may have many of their needs taken care of by parents, scholarships, and loans, and little income for savings, you may find the ratios in need of a little tweaking, even if the 3 basic expenses remain. And keep in mind, income and spending may differ drastically between the school year and the summer\u2014it\u2019s a good idea to make separate budgets for each time period.<\/p>\n

First, you\u2019ll need to calculate total income. This can include a parental allowance, part-time job or work-study job, stipend, or leftover financial aid. Some kinds of income, including refunds received from the financial aid office, scholarships, and family gifts, will be received in a lump sum rather than weekly or monthly. For this income, it\u2019s better to divide it up over the total months your student is in school during the year, starting with the first month you receive it. This will help avoid the problem of creating overspending habits in the wake of a windfall.<\/p>\n

Next, make a list of expenses, subtracting the sum from the income total calculated above. If it\u2019s a one-time expense you expect in the future, you can either divide it by the number of months in the school calendar (or months left until it needs to be paid) to be sure enough income is set aside each month to cover it.<\/p>\n

In order to organize expenses and make the budget simpler to follow, it\u2019s helpful to group them together in basic categories:<\/p>\n