A column on personal finance prepared by the Virginia Society of Certified Public Accountants


(August 20, 2003) – Don’t wait until your college freshman heads off to school to teach them how to manage money. The Virginia Society of CPAs says that parents can prepare their children for the rigors of managing a college budget by discussing monetary issues openly and teaching them the basics of personal finance. Here are some guidelines to help you get started.

Have a Plan in Place

To avoid misunderstandings with your soon-to-be college freshman, be up front about which college expenses you will cover and which you’ll expect your child to pay. Once you’re in agreement, decide on a plan for disbursing those funds.

Monthly payments typically work best. Students given a large lump sum at the beginning of the semester may be tempted to use the entire amount in the first few months. Be clear that when the money runs out, unless it’s an emergency, you won’t cover the shortfall. Otherwise, your child will never learn to live on a budget.

Focus on Budgeting

College life is full of opportunities to spend. Encouraging your child to develop a budget will help them maintain control of their money and limit spending. Have your child list all sources of monthly income – job earnings, savings, and parental support – and then develop a list of estimated expenses for the same time period.

Realistically identifying your student’s college living expenses in advance can be tricky. For starters, have your child consider the cost of books and school supplies, meals not covered by a meal plan, entertainment, personal care items, laundry, telephone and Internet service, cab rides or car expenses, and clothes. Remember, budgets need to be flexible and can be revised after the first month or two.

The next step is to total income and expenses. If expenses outpace income, your son or daughter needs to find ways to increase the income stream, perhaps by taking on a part-time job, or by reducing spending.

Credit Cards Can Spell Danger

With credit card companies aggressively targeting college students, credit cards can be a major pitfall for your child. Discuss the pros and cons of using a credit card. For example, having a credit card for emergencies and for building a credit history is not necessarily a bad idea. But for some students, access to credit is an invitation to overspend.

If you decide it makes sense for your child to have a credit card, be sure he or she understands how credit works and the importance of charging no more than the amount they can comfortably afford to pay each month.

Want to be on the safe side? Have your child use a debit card for everyday expenses and reserve the credit card for true emergencies. Debit cards give kids all the convenience they need but are limited to the amount of money in the student’s bank account.

Checking Accounts Provide Convenience and Teach Skills

It’s usually a good idea for a student to open a checking account in the area where the school is located. Help your child locate a bank that offers free or low-fee checking for students and has several convenient ATM locations. This reduces out-of-network ATM fees.

Every college student should know how to balance a checkbook. It’s a tedious job, but it’s cheaper than bouncing checks. Take the time to show how you manage your checkbook so the process is familiar. Also, be sure your child realizes that out-of-state check deposits take a few days to clear.

Smart Spending Saves Dollars

Remind your child that he or she can keep their spending under control by looking for low-cost entertainment on campus. Universities and college towns are infamous for having excellent entertainment at lower prices. Also, joining clubs and organizations ensures that a college student will have something to do and someone to do it with, and the expenses are far less than what could be incurred on a weekend shopping spree.

College students also need to learn to comparison shop and economize. Clipping coupons, purchasing used textbooks, sharing cab rides, buying generic brands, and renting videos instead of going to the movies are just some of the ways a savvy scholar can save money.

CPAs point out that learning to manage money is an important part of your child’s educational experience. Budgeting, smart spending and limiting credit card use are excellent lessons to that will help lead your child toward a healthy financial future.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at

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