As the mother of two college students, I continue to scratch my head about a simple question. How much do my sons need for spending money, and what portion of it should I provide?
Unfortunately, experts say, there’s no one answer, either on the amount or how parents and children should split the cost. But there are some smart guidelines that families can follow:
Look at the particulars of your situation. Determining how much to chip in will depend on things like whether your child has a college meal plan and, if so, what it covers; the cost of living where the school is located and whether your son or daughter has a car on campus, which means expenses for gasoline, maintenance and possibly parking.
Leslie H. Tayne has five kids in college, including a pair of twins. Each has a budget worked out with Tayne that’s designed for his or her own needs.
“A parent can always fund their child’s account with more money. But if they give too much, it will likely all get spent.”
Her son, for instance, at SUNY Buffalo, needed very little spending money his first year, since all his expenses on campus were covered. A daughter who’s now a senior at Northeastern University, however, lives in a Boston apartment and has to cook all her own food. “So my budget for her,” said Tayne, a lawyer in Long Island, N.Y., “is completely different.”
But, generally speaking, the going rate for a spending allowance at college seems to be $100 to $300 a month, said Leah Bourne, managing editor of the financial site The Money Manual. A 2018 OppLoans poll of 1,000 college students bears that out; 67% said they receive $2,000 or less annually from their parents.
One way to check what seems reasonable is to go on Facebook pages and messaging groups for parents of your child’s college and ask what others do, Bourne said.
Start off on the right foot. There’s no harm in low-balling what you’ll shell out at first.
“A parent can always fund their child’s account with more money. But if they give too much, it will likely all get spent,” said Michael Gerstman, a chartered financial consultant in Dallas.
Estimate what the costs might be, offer your child a figure that’s on the low side and plan on revisiting it after a month or two.
Track your child’s spending at college. Beverly Harzog, a personal finance expert at U.S. News & World Report, made sure both her kids got accounts on the Mint.com app to track their spending — before they left for college. She liked that they could set up weekly goals and get email messages when they spent close to their limits.
“This is a good message to learn at the start of college,” said Harzog. Still, particularly during freshman year — and for some students, sophomore year — parents should keep an eye on the kids’ spending, she added.
Harzog learned this first-hand with her son. “He was completely out of money by Wednesday if we gave it to him on Friday,” she said. Luckily, her husband was listed on their son’s checking account at college, so the couple could see his spending for themselves.
“You can’t eat at Chick-Fil-A and Five Guys every day and not run out of money in a couple of days,” Harzog noted.
She and her husband had regular conversations with their son about money. And by his senior year, they felt enough confidence to trust him with a credit card, Harzog said.
Decide whether you expect your child to get a part-time job and then contribute to discretionary expenses. There are two schools of thought on this.
Experts like Todd Christensen, education manager at Money Fit by DRS, a nonprofit debt relief agency in Boise, say a student who’s able to stay on top of academics would benefit from a part-time job. “Not only does it put ‘skin in the game,’ by which they appreciate and value money more appropriately,” Christensen said. “The part-time job also builds their confidence to live independently.”
And many families need students to take jobs because they can’t fully fund the college experience and continue to save for retirement, said Ashvin Chheda, president of Opes One Advisors in Addison, Texas.
But some families can afford both and want their children to be free to focus on their studies without distractions. Or they may prefer their child do a professional internship, even if it’s unpaid.
However, Chheda advises these clients that “if their child is spending excessively or beyond what is reasonable, then a conversation about getting some form of part-time employment at college will be necessary.”
If you do decide to contribute less to your child’s spending budget because he or she has a part-time, paying job, consider putting the money you save towards any student loan debt, Bourne said.
Just don’t reduce your contribution dollar for dollar with your student’s earnings, Harzog said. “You don’t want to make them start resenting having the job,” she noted.
Check to see whether money you might give your child for expenses could affect his or her financial aid. It probably won’t, since your assets have been included when filling out the FAFSA (Free Application for Federal Student Aid) form for financial aid, Tayne said. Giving money as a spending allowance just moves those assets around.
However, it is possible — though unlikely — that a student’s earnings could affect his or her financial aid. For the 2019-2020 school year, a student can earn up to $6,660 before the employment money is counted as income for financial aid purposes.
Finally, try not to let any college allowance you bestow put a strain on your finances. If you’re stressed about money, your kids will probably sense something is wrong. “Have the conversation and have it honestly,” Harzog said. “Most kids are more resourceful than we think.”
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