Creating a Financial Plan for the First Year of College
Even with its hefty price tag, tuition doesn't capture all the costs of higher education, particularly for students in their first year of college. Creating a realistic plan can help minimize unexpected expenses that could pop up throughout the year.
First, visit the school's website, which usually has estimates on the total cost of attendance. You can get a sense of which fees and services are part of tuition, as well as room and board — including campus gym access, health services, other meal plans, and more.
After examining included costs, Robert Farrington, Owner of The College Investor, advises families to consider common expenses for first-year students.
Initial Costs
These are for necessities freshmen need to furnish their dorm or apartment, including toiletries, cleaning supplies, kitchen utensils, laundry products, and storage. Your student should coordinate with roommates to avoid buying two of the same product. Also plan for big-ticket technology items like a laptop or tablet, a printer, and a phone. Some retailers, including computer companies and college bookstores, offer student discounts.
Ongoing Expenses
Budget for monthly phone bills, off-campus meals and entertainment, haircuts, clothes, and laundry. Consider the savings if your freshman eats on campus most of the time, but plan for days your student may dine at restaurants with friends. If your student won't be eating on campus for all meals, check if the school's meal plan has a rollover option that allows students to use the funds in later semesters.
Transportation
If your student will be out of state, Farrington recommends families budget for five trips home per year: Thanksgiving break, winter break, spring break, the return trip home following the school year, and an additional trip for events such as milestone birthdays, weddings, or reunions.
The costs — and number of trips — are often dependent on the mode of transportation, be it car, train, bus, or airplane. Students who commute from home or live off campus should budget for gas, insurance, parking, and public transit costs.
Health Insurance
Many colleges require students to have health insurance. Under the Affordable Care Act, anyone under 26 can stay on their parents' health insurance plan. If your student is not under your health plan or if he or she needs additional coverage, some universities offer student health care plans. Compare plans to find the best rates.
Books and Supplies
Look carefully at the cost of new books, used books, e-books, and rentals to find the best options and prices. If your child plans on taking courses requiring additional equipment such as music, or science classes with lab work, take these additional costs into account.
Activities and Entertainment
Some student activities like volunteer organizations, club sports, and performance groups may have dues or fees. And it's wise also to leave room in the budget for entertainment, from campus-sponsored events such as concerts or football games to off-campus recreation such as bowling or movies.
Emergencies and Extras
Farrington recommends budgeting an extra $1,000 annually for unexpected expenses like computer repair, cell phone replacement, and special opportunities like a volunteer trip or studying abroad.
When you and your child start budgeting, set up a system online, on a spreadsheet, or with pen and paper. Make sure both sides — parents and children — understand their financial contribution, along with parental limits. Farrington suggests an ongoing dialogue starting the student's senior year of high school. "The first year of college is new for everybody, so this needs to be a holistic discussion," he says. "And the clearer parents are on expectations upfront, the easier the whole process becomes during the year."
Once you have a solid financial plan in place, use this daily college budget guide to ensure your student's expenses don't exceed income.
