About halfway through their first semester of college, many students experience an important turning point in their financial journey. While you’ve planned for the basics, such as tuition and room and board, there are some expenses that are often overlooked until the reality of living away from home—and all the costs that come with it—begins to sink in. This is a good time for a financial checkup.
Nearly half of all college students have a car at school, according to Kiplinger. If your student has been driving to and from campus every day, he or she has probably realized that gas isn’t cheap. Riding a bike and using public transportation can save money, but even those methods may come with costs.
The midpoint of the first semester is a good time to remind your student to start keeping track of gas, as well as maintenance and insurance spending.
Joining a fraternity or sorority is another costly expense often overlooked until well into the first semester, and “going Greek” can be pricey. First semester sorority membership dues at the University of Michigan, for example, can cost up to $1,765. Many campus clubs also require fundraising commitments.
By now, your student may also have realized that spending time with new friends also comes with a cost. Has your student set aside some “fun” money for the movies, coffee, late- night snacks and even road trips? If not, now is a good time to budget for those expenses.
- Create a routine. College is the perfect time for students to learn how to be more responsible with money by recording their expenses and any income they earn. Encourage your student to start recording transactions on a weekly basis. Saving receipts and using a mobile app can be a great way to track spending. Online banking and setting up alerts can also help.
- Keep credit card spending in check. Is your student’s credit card already maxed out? Your student shouldn’t spend more on a credit card than he or she can afford to pay in full on a monthly basis. “Responsible use of credit cards can help your student avoid financial problems in the future and establish a good credit rating,” says Randy Hopper, Vice President of Credit Cards at Navy Federal Credit Union. “Encourage your college student to sign up for electronic payment reminders, balance notices and billing statement notifications.”
- Consider a prepaid card. A prepaid card makes transactions simple and secure. Your college student can use it online, at the ATM and for cash back at participating merchants. Plus, it may be protected by a zero liability policy, which means you're not responsible for any unauthorized purchases. With a prepaid card from Navy Federal, you can load funds onto the card anytime and monitor your student’s spending.