Teaching your student the art of budgeting isn't just about saving them from financial stress; it's also a way to safeguard your own wallet. By empowering your child to manage their finances responsibly, you're indirectly contributing to your family's overall financial health.
We sat down with Cambium’s Director of Operations, Joanna Wallis, who is a parent to three college age children to understand the challenges she faced in managing her college expenses.
Q: Can you provide background to your college experience with your children.
A: My oldest just graduated, my second is a senior, and my youngest is a freshman. They all attended out-of-state private colleges with varying scholarships. Each held part-time jobs during and before college to cover some personal expenses.
Q: What was the biggest financial challenge?
A: It wasn’t the tuition, fees, or books, which are predictable. It was the unexpected costs. Sorority or fraternity fees, replacing lost items, setting up off-campus housing, clothing, travel, and groceries were all challenges.
Q: How did you manage these extra costs?
A: We learned to budget for essentials and limit discretionary spending. We booked travel in advance and compared prices. We would pre-book hotels for many days at a time and/or weekends when we thought the college may hold a parents’ weekend/homecoming/graduation/move in and then cancel off the days we didn’t need. We also set grocery budgets for our children and encouraged cooking over dining out.
Q: What was your most successful strategy to keep expenses in check?
A: Empowering our kids to manage their finances was key. While they had part-time jobs, they needed help budgeting, especially when using credit cards. We created a simple Excel spreadsheet for them to track income, expenses, and savings. This tool helped them understand their spending habits and make more informed financial decisions. Hopefully, with time, they'll transition to using a comprehensive money management app or software to streamline their finances.
Q: What would you do differently?
I'm approaching my youngest child's freshman year with a new strategy. I'll be setting stricter financial boundaries and expecting more responsibility from the outset. By having her use a credit card and requiring her to submit reimbursements for items in the scope of her budget, I hope to instill better cash flow management. Additionally, I'll be holding her accountable for lost or damaged items. It's a steeper learning curve, but I believe it will benefit her in the long run.
Q: Do you have a singular piece of advice to other parents?
Sit down with your kids and teach them cashflow and budget management and then create regular check-ins to review (the credit card statement is a good time for this!). Make rules that they easily understand and then stick to them.