Setting a "spending money" budget for college -- realistic guidance

Parents Forum
1

My daughter leaves for college in the fall. As her dad, one of the final things I’d like to teach her is financial independence. To do that, I’d like to put her on a budget. I want to set a budget that allows her to have fun and be social, but to have enough financial constraints that she needs to think twice before spending. I don’t want her to worry about money, nor do I want her to stress about taking a late night taxi for safety, but I also don’t want her to feel like money is infinite.

In high school, she’s always had my credit card and been free to spend on it. I’ve always told her to “use her judgment”. I tell her that I expect her to take the bus, not an Uber, unless its late at night and a matter of safety. I tell her she can shop for clothes, but not to be excessive. She is always free to use the credit card for household expenses, like picking up dog food if we need it, buy feminine hygiene products, school supplies, etc.

Overall, for a teenager with zero hard financial constraints, she has been great. When she shops for clothes, I see small charges from thrift stores. It is rare for her to dine out with friends. Every time there’s a taxi or Uber charge, I know its for a late night ride home. And when she does decide to splurge on something, I usually see that charge appear not on my credit card, but on a debit card linked to a small bank account that holds “her money” from birthdays, grandparent holiday gifts, a handful of jobs she’s had, etc. So I know she is treating my credit card like a scare resource.

Still, we live in NYC and it’s expensive, and she has a lot of small financial leaks: $7 coffee charges at Starbucks, an $18 salad at Sweetgreen, $100 of school swag in her senior year, $40 for a day pass at the climbing gym, things like that. I estimate that she probably spends $450/month in credit cards, which objectively is quite a lot for a kid without a job.

So what’s a reasonable college budget? We don’t yet know where she is going to college. It will not be in a super-high cost location like NYC, but it also won’t be somewhere extraordinarily cheap.

3 Likes
2

My D had summer jobs in HS before college (nothing big, like making sandwiches at Jimmy Johns, baby sitting, type stuff) but it was enough that she was responsible for her own spending money for stuff that you are describing. We paid for tuition, room, and board, including a full meal plan, so anything additional was up to her unless it was an emergency type situation (and she texted us before she would use our card). We paid for books too first year but after that, she took care of those expenses too.

IMO, nothing promotes financial independence more than earning your own money. It’s funny how expenses become “too expensive” or “not worth it” when they are paying for it ; )

12 Likes
3

This is going to be very school dependent I think- my dd goes to a LAC in small town pa and spends very little- all students are on the meal plan and the food is decent so there is not much need to go out other than occasional walks to their small town on the weekends. The town is super strict on underage drinking so almost all socializing happens on campus - they even have a nice coffee shop on campus that takes meal swipes. Kids who are in more exciting locations definitely spend more - Ubers, bars, restaurants- it can get expensive fast. My dd uses her summer job $ for her few off campus expenses and most of her fun clothing shopping.

4 Likes
4

Our kids had jobs in college and in the summers to fund discretionary expenses like these. We did give them some extra money…but not a huge amount and certainly not $450 a month.

Our kids managed money they earned very well…and learned to live within their means.

If they needed our credit card for an emergency, fine…but for discretionary spending, the Thumper family felt the student should earn the bulk of the money to support that.

Our kids quickly learned that they could make a cup of coffee for far less money than a daily Starbucks. They learned how to economize and save for special things (e.g concert tickets). They realized they could do their fitness training at the college fitness center for no additional cost.

What you give your student monthly is your family decision. If you decide to give enough money to fund all discretionary spending, that is fine for your family.

But FIRST…I would have your DD keep an accurate log of what she spends. And then look at that carefully with her.

6 Likes
5

Its clear youve done a great job imparting your values to your daughter! Since you are pretty good with the $450 a month that seems like a good start.

For our student in a similar situation we took actual spend and called that the new allowance. I set up direct deposit from my employer so the student gets paid every 2 weeks just like I do. For us it is $200 every 2 weeks at a southern flagship. You could set up $225 every 2 weeks starting now and see what happens. Does she eat at home so she can save some of that for college? Does she spend it to zero (ala living paycheck to paycheck) each pay period? Its nice to start while they are still at home so you can see what happens.

2 Likes
6

Not judging you giving your child a credit card.

Our kids were given no spending money. Their spending money was what they earned over the summer, birthday money or from on campus jobs. Sometimes I would guve them a few bucks for no reason, in the first year.

6 Likes
7

@NYCDad99 We have a freshman and she had an allowance the last two years of high school but was also free to use my CC for household expenses and sometimes other things that were just for her. To set her allowance in high school we had her make a budget, which we approved and then gave her an amount in line with that. When she started college last fall we didn’t initially change her allowance and she was “broke” the first month. We asked her to do a new budget…she did and basically came up with the same amount as we were giving her…and yet she was broke. So then we talked her through it and helped her anticipate some new expenses she might have. She initially said…oh, yeah, but that’s a one-off expense…several times. By going through this she realized there are/would be one-off expenses pretty much every month so we built that in to the budget. Once we came up with a number we actually reduced it by subtracting out what she budgeted for uber. We put her uber account on my credit card and did not give her separate money for that. That was our choice because we wanted to make sure the was never tempted to get in a car with someone who had been drinking (she doesn’t have a car at school) due to lack of funds. So anyway…we ultimately raised her allowance by about $150/month vs what she got in high school…AND we pay for uber. I feel like th actual amount can vary so much based on your own values and resources but the process was a good one so figured I’d share. FYI categories of things in her budget were…coffee/snacks, eating out, sorority/club/team events, movie/show/cover charges, gifts, books/supplies/class expenses, clothes/alterations (for dresses for formals), target runs…makeup, toiletries, limited groceries, and a small “other” category. So for us this is kind of a large amount and not all expenses happen each month, which I also think helps introduce more budgeting. Best wishes to your daughter!

4 Likes
8

My 5 kids have never had an allowance, in school they got lunch money but could make lunch and pocket it. They all had part time jobs starting freshman year in HS and were expected to work summers. In college they usually worked part time and definitely full time summers to make their spending money. We paid for things like toiletries, medical bills, travel to and from college, car insurance, cell phone plans, they were on the hook for most other things. They have their own uber accounts. I’m not paying for coffee, drinks, takeout, sorority formals, I do donate for fundraising, I’ll pay for 5k’s and half marathons. I don’t pay for gym memberships but do pay for hair cuts and highlights, but not manicures. Our two oldest live independently (pretty impressive here in NJ), middle in in grad school in Boston and pays her rent and food.

9

I have no idea! We paid for most everything in high school and also cover most expenses in college. S25 is naturally frugal. His first week at school he bought books and added a $12 poster to the tab and wanted to reimburse us. Freshman year he lived in the dorm and had a full meal plan. Now he’s in a rental house, and we transfer rent money on the first and money to cover utilities on the 15th. He uses our credit card for other expenses. He’s frugal and very responsible. I don’t see any need to change this arrangement.

S25 is a different story. He spends. A lot! We’re going to have to put him on a budget, but I haven’t figured out the particulars yet.

2 Likes
10

My kids are authorized users on our card but do need to ask unless it’s something like paying urgent care or getting an oil change.i recently venmo’d my daughter for the Tamiflu she had a friend pick up for her.

1 Like
11

Yes, their debit cards were linked to our accounts and if they needed to, they could have used it for emergencies. If they had to buy books or supplies, etc…, we paid for that. We paid for optional college excursions. No money for going out though. They both had plenty of fun at college.

1 Like
12

This was basically our approach as well.

For S24, we took the school’s own suggested budget for books, supplies, and personal expenses (we planned to cover travel home directly, although something like a spring break trip with friends should theoretically be on him) and divided it over the total weeks of school, and it came out close enough to $100 a week such that we just used that. We then deposit $200 every two weeks in S24’s checking account, paycheck style.

S24 is then free to use that money as he sees fit, and if he wants to save some, that is fine with us.

And that is what has happened so far, meaning he is staying well under budget most two week periods and therefore saving a good percentage.

So all this is working pretty well by my standards, except perhaps for one thing–periodically S24 will ask NiceUnparticularMom to buy something online and send it to him. To be fair he doesn’t have a car at school, and this is stuff he can’t get within walking distance. And it usually isn’t too much. But theoretically this should now be coming out of his budget, and I am pretty sure we are NOT getting reimbursed. I really think he should be budgeting for all this stuff, but so far I am getting outvoted.

But anyway, aside from this loophole, I do think this approach serves the purpose of teaching about budgets and savings and so on in a way that will map onto post-college life. The earnings side is a whole other story, of course, but for us we were fine with starting on the spending side.

1 Like
13

Almost all of my kids’ spending money was also summer earnings. We covered a meal plan and travel home. Only exception is uber. They have always had my uber app from our family sharing and it’s connected to my credit card. I never wanted them to hesitate if they needed a ride for any reason. They’ve never abused it. They’re also AU on one of my credit cards for emergencies. Neither has ever used it.

14

Wow, this is an active forum. I thought my post would have to sit for a while before I got any responses. Some reactions:

  1. having the Uber charge directly to my credit card is a great idea. That way, she can take Uber whenever necessary for safety and she doesn’t feel like it is an expense she needs to be accountable for.
  2. its good for me to hear the number of families who don’t give their kids any allowance, and who expect their kids to cover their own discretionary spending. we did not take that approach – we’ve always said, “school is your job” and we will take care of the money. this has resulted in great school performance, but a kid who is naive about money.
  3. at college, I still believe school will be her job, as she’s going to start her studies in the engineering department. If she wants to ultimately go to grad school, or apply to a corporate professional track, the grades and actual learning still matters.
  4. notwithstanding all of this, our kids have tremendous privilege. They can attend whatever school they want and will graduate free of debt. But I want to make sure that they don’t take their financial privilege for granted, and learn to live “within their means” (ie budget).
  5. finally, I want her budget to be “typical” for what most other students experience. I dont want her feeling like a broke scholarship kid who can’t afford to eat out with friends, but I also don’t want her to be the kid who thinks nothing of suggesting the $75 per person dinner when her friends might be on a tighter budget. (right now, she attends a private school where most of her classmates come from fairly/very/extraordinarily affluent families.) So actual “hard numbers” about reasonable spending money would be helpful to me.
3 Likes
15

Re Uber, I would have only reimbursed in an emergency. It’s usually a going out expense.

My D might have used Uber, but if so, I never heard about it. She attended an LAC where most things were walking distance. I’m not even sure the town had Uber. My son attended a university with buses that ran all night between downtown and campus, so if he needed transport, it was very cheap. I know he occasionally paid for Ubers on his dime.

My youngest graduated in '23. By then, he had his car. He never used it for going out at night, afaik. But he lived near downtown where all the students hung out. We did pay for car repairs and insurance, but not gas, unless he was going to or from our house during breaks. Our D has never had a car. she got rides home with friends, and we gave those kids gas money. We always covered costs getting home for breaks.

16

LOL, zero chance my kid will have a car in college. I’m still working on the “learn to drive” part. I had to push and push and push my daughter to get a learners permit, which she finally did during her junior summer. Since then, I have been logging her time and miles of driving experience – she has around 25 hours behind the wheel, and 500 miles, and at least 15 of those hours were in a driving class we paid for. It’s just very hard for kids who grow up in NYC to learn to drive safely. And we keep a 3-row SUV in NYC, so it’s just about the worst possible car to learn to drive in. But I fear that if she doesn’t learn to drive, she will end up as one of those 35 year old New Yorkers who literally can’t drive, and can’t pass a driving test to get licensed. (I have several colleagues in their 30s, 40s, and 50s who have failed multiple driving tests and simply cannot get licensed.)

6 Likes
17

I think “typical” is going to depend highly on the school and the location. My D spent $100-200/month at very most. Usually it was stuff like tickets to a campus show or a burger out with friends. I think it would have been different if she were in a city or on a small campus, but she was in a fairly rural location at a big school where almost all the events were campus centric and free to very low cost.

FWIW, we also told our D school was her job but having work experience is part of the education too, especially for a prospective engineer. Once our D started earning “real” money in the summer, we started talking about savings, investing, and funding retirement accounts.

PS. Good job on keeping on her about learning to drive. She doesn’t want to be limited with internships and jobs because of lack of public transportation.

4 Likes
18

Our kids both have a family credit card. Neither are all that spendy, so that works for us. Neither of them want to deal with cash, so if I put money in their bank, they would have to use their debit card and/or transfer it to venmo, which overall is less convenient and safe then using the credit card.

Both kids were college athletes, so no time for them to work during the school year, although both did work in the summers.

Both had cars at school too. We had no intentions of that happening, but well, then came Covid.

When the kids lived on campus, $100/week is plenty. When they are off campus, you have to look at rent/food costs…often those are cheaper than living on campus, but not always. After that, all of this really depends where she goes to school. If she’s at SMU or Wake Forest she is likely going to spend more than if she is at Bing or U Delaware or Denison. And even more if she joins a sorority.

2 Likes
19

My kids have used my uber accounts in more emergency situations, and their own on a pretty regular basis, especially my Boston student. We live 8 miles outside of manhattan, they uber to train stations and home from Hoboken enough with their friends that there is no way I’m paying. Our daughter surprised us last weekend by coming home on Amtrak, was happy to pay for her midnight uber from Penn station and her 5:30 am uber back to the station Sunday morning. For some reason she wasn’t scheduled to bartend and she really isn’t one to just sit and relax (she got home from Hoboken at 3 am so that was tough, but she’s used to it).

1 Like
20

Neither kid had a job in freshman year, though they could have done so. We did tell them that their first year was about learning the ropes of college and balancing academics and fun.

Both got jobs of their own volition as college sophomores and have worked ever since. My eldest, a 2020 grad, moved away for good 3 years ago. She worked remotely and saved that money. My youngest moved away just over a year ago. Both work full time.

We no longer support either of them in any way, which is kind of strange to think about. I personally think it was very good for them to both work during college. And, FWIW, both went to very rigorous colleges. My youngest probably partied too much, but he has a great job now, so no harm done.

3 Likes