Thrifty Tips for Parents of College Kids

Even if your small or home-based business has been thriving for several years, you may face some financial challenges if you have one or more children going to college.

You may have saved for years, but if you are like most families, it’s still not enough to cover tuition, books, room and board. You’ll probably have to tighten your belt from the day you drop your oldest off at their new dorm until the graduation ceremonies for your youngest come to a close, but whether the kids-in-college stage lasts for four years, eight years or longer, there are strategies that can help.

Know Your Money Situation

You already know that the key to frugality is knowing where every cent is destined to go, and this is particularly crucial when it comes to planning for college expenses. Once your child has chosen a college, in addition to knowing what tuition will be, you can plan for living expenses as well. Colleges often offer a rough estimate for what it will cost to live on or off campus. You then need to figure out what the four years of school is going to cost, and you can work out a budget with your child. Be sure to include provisions for necessities such as clothes and the occasional meal out or late-night car sharing service.

However, you should also look for ways to save. Does your they have to have a car at school, or will a bike and a bus pass suffice? What housing options are less expensive? Have you taught thrifty habits, such as how to cook and how much can be saved shopping for secondhand clothes? While this won’t be the right choice for every family, one option could be to attend a local community college and live at home for the first two years and then transfer. This can save a significant amount.

Secure the Needed Funds

Once you know how much you need, you’ll know how much must be earned or borrowed. The first step is to find out what may be available in grants and scholarships. Your child may also be able to work part-time while in college. While you may be averse to going into debt, this is one time when borrowing money may be unavoidable. Lifetime earnings for people who have a college degree are significantly higher than they are for those without one, so like a home mortgage, this can be a type of “good” debt.

The first step in borrowing money is to complete the Free Application for Federal Student Aid. You can help your child do this. Once you know how much is available in federal loans, you can look to private student loans to cover the gap. You may need to cosign for these loans, and you may also want to consider paying interest on these while your child is still in school, or having your child start to pay on the balance.

Tightening the Belt

Even after tapping several sources, your financial plans may include setting aside a certain amount of money for your children each month. If you’re already frugal, it may seem like there’s not much more you can do to free up more cash, but you may be surprised. If you have student loans yourself, you may be able to refinance them and make lower payments. It might also be possible to refinance your mortgage and your car loan. If you don’t make a regular practice of shopping around for lower car and home insurance prices each year, this is the time to start.

You might want to make other cuts in your budget, such as taking cheaper vacations close to home, but there may also be creative ways to boost your income as well. What about renting out your child’s room to short-term guests? You might want to push to expand your business, picking up more work or additional clients. However, if you have kids still at home, it’s important that you don’t make them give up things their older sibling had. A family meeting to talk about the budget is not a bad idea, but no one should feel deprived or as though the bulk of the family resources are going to one person.

Student Life

If your child is going to school more than an hour or two away, encourage them to spend more weekends at school rather than coming home. The cost of driving or taking a train, bus or plane back and forth can add up quickly. This can also help encourage their independence and adjustment to their new life. However, when they do decide to come home, be sure to look into any transportation discounts available. There may be many other student discounts to take advantage of as well, from software to movie tickets to meals out and more. Some banks may offer student accounts that do not have service charges or that even earn interest. As is the case with any money-saving offer, it’s important not to be tempted by the discounts to purchase something you wouldn’t ordinarily.

Teach Balance

With all this planning and frugality, it’s important that you also teach the value of spontaneity and fun. Although it may seem counterintuitive, a budget-tracking app may actually help with this. They can automatically classify spending into certain categories and can even send alerts when spending in one category is getting high. A secured credit card may be a good idea. Credit card companies are notorious for showering students with offers when they first arrive at college, and it can be easy to lose control of spending.

A secured card allows a set amount to be deposited, such as $500, and it is then available if there is an emergency. Keep in mind as well that some opportunities that seem as though they could be expensive, such as studying abroad, may not be significantly more costly than a semester at the home university. A thriftier alternative to study abroad that still allows students to gain some international experience is work abroad programs. A few countries offer short-term visas for American students to work there.