The first year of college is often a child's first step into the adult world. With that step comes fun and freedom, but also a need for them to adopt responsibility over aspects of their life that up until now their parents took care of for them. There will no longer be someone managing their money, setting expectations, and reinforcing guidelines on a daily basis and sometimes this sudden change can send a freshman college student spinning out of control. To avoid this, a conversation regarding money and time management is a parent's first step. Although you will not be there every step of the way, you can still create guidelines for your child to follow even when they are miles from home.
Finances are often the first item of business. Giving your child a set budget is a necessity, but the timeline that this budget will follow can vary from a weekly allowance to one that will cover a whole semester. The length of time between each deposit will provide your child with varying levels of responsibility over their finances and it is up to you to use your own discretion when deciding how much your child can realistically handle. The first months of college will be an adjustment period for both of you and the perfect allowance amount will take time to pinpoint so be prepared for trial and error. Within the budget system it is also helpful to set aside specific amounts of money for different categories such as food, school supplies, transportation, and fun. This provides slightly more structure while still allowing your child the opportunity to learn how to manage their own spending habits.
Another aspect is whether or not to give your child a credit card. Cash provides them with a tangible measurement of their spending, however a credit or debit card is lower risk for lost finaces and when connected to an online banking account can track your child's spending and create a graph to help them monitor where their dollars are being spent. The ability to follow a budget is a crucial real-world skill that cannot be taught in a classroom and the transition period from highschool to college provides the ideal hands-on learning opportunity a young adult needs.
My freshman year of college my parents chose to follow a monthly allowance system and gave me my own personal debit card. I was fully responsible for budgeting enough money for my meals, my school supplies, my gas, and my personal spending (clothing, movie tickets, frozen yogurt, etc). I tracked my spending online and by the end of the year I had become proficient in budgeting enough for the necessities such as groceries, gas, textbooks, and still having enough left over for a nice dinner with friends or a concert ticket.
There is definitely a learning curve and there were mishaps the first few months but looking back I would not have learned money management without those trials and tribulations. In the long run, a couple mistakes here and there early in life will only help me to avoid big ones later on.Freshman year of college is just as much about gaining a higher education as it is about learning how to live on your own and the life lessons learned the first year away from parents are invaluable. Sending your child off to college with too much or too little freedom can result in their own respective problems. The perfect middle ground will differ for everyone but a child must take their own financial responsibility at some point in their life and college is one of the first true opportunities for them to do so. Set your child up for success in the future by giving them control at a time in their life when it is okay to make mistakes.
About Caldwell Trust Company
Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently manages over $800 million in assets for clients throughout the United States. The company offers a full range of fiduciary services to individuals, including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.