College budget 101: Get your child on track

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College budget 101: Get your child on track
8/21/2006
msnbc.com

Arm your kids with financial strategies before they start hitting the books. “Today” financial editor Jean Chatzky offers tips

So you think your 18-year-old is ready for college. You've prepared him with all the basics. Armed her with all the stuff she needs. Shower caddy? Check. Alarm clock? Check. Mini-refrigerator? Check. But how about basic financial strategies?

"I tell parents that if they send their students to college and they've never discussed their credit card APR, if the student doesn't know what that is, then it's time to have a conversation," says Tally Hart, senior adviser at Ohio State University.

According to the College Board, parents can bank on shelling out an average $12,127 for tuition, room and board at public colleges this year. But there's another $3,000 likely to be spent on textbooks, supplies, transportation and "other." And students themselves will often be responsible for budgeting that money themselves. So how do you keep your freshman from draining his bank account by the end of the first month? How do you make sure she hasn't — by Thanksgiving — plunked thousands more onto a credit card?

Pause, then plan: Your first instinct may be to create a budget before you even pack up the car, but that's the easiest way to leave things out. Instead, at the start of the semester, have students record their purchases. "We encourage students to keep a financial journal for at least six weeks, writing down every penny they spend. That way, they'll find out how much they are spending at Starbucks or Caribou — money that could be used for a better outcome," says Hart. Once they know where all those twenties are going, it's easier to cut back on unnecessary buys, as well as budget for those that are often forgotten.

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