When it comes to planning for your child’s college expenses, you’re probably focused on big-ticket items like tuition, room and board, and textbooks. But it’s also a good idea to come up with a budget and plan for your child’s spending money allowance.
But how much spending money for college does a student need? While the number is dependent on a range of factors, the average amount of spending money for a college student is $2,000 per year or about $200 per month.
When figuring out how much money to set aside and deciding how you and your child should split the cost, here are some guidelines and tips to follow.
Agree on how spending money should be used
If your child qualified for scholarships or grants or took out student loans, those sources of financial aid are designed to cover only qualified education expenses. There are strict guidelines for how that money should be used. Typically, the student can only use their financial aid to pay for tuition and fees, room and board, textbooks, and transportation.
Extra costs, like the occasional trip to the movies or a late-night coffee run, aren’t covered by financial aid. That’s why your child will need to have a little extra spending money of their own. How much they will need depends on their location, school, and their habits.
Before your child heads off to college, discuss their goals for college, their academic and social plans, and how their spending money should be used. For example, if they plan to participate in intramural sports or pledge a fraternity or sorority, they will likely use most of their spending money on those activities.
Discuss who is responsible for spending money
Agree with your child on who is going to provide their spending money for college. If you can afford to do so, you may want to contribute some money each year for them to spend as they wish. But make sure you set clear limits; if your child wants more spending money for college than you allocated, then your child will have to earn money themselves by getting a part-time job during the school year or by working during the summer.
It’s also wise to set some ground rules for how the spending allowance should be used. For example, if your child spends all of the money the first month at school, you won’t replenish the fund. And if they rack up debt, they’re responsible for paying back the charges and any interest that accrues.
Consider setting your child up with a budgeting app like Mint or You Need a Budget to track their money and spending habits.
Does your child need more spending money? Learn about how they can earn extra money while in school.
Revisit your spending money budget at least once per year
Revisit your college student’s spending money plan at least once per year or once per semester, especially after your child’s freshmen year. You may find that your child’s needs change and you have to make adjustments.
Analyzing your child’s experience can help you better prepare for the upcoming semester. Review their spending together to see what their most common purchases were, what issues they faced, and potential solutions to save money to improve their money management skills.
For example, if your child spent a lot of money at the coffee shop, it may be more cost-effective to invest in a good-quality coffee machine for the dorm room for the next semester. Or, if they spent more money than expected on groceries or dining out, you may be able to skip the meal plan next year. If your child spent a lot of money on new clothes, you could talk to your child about shopping at thrift shops, resale sites like Thred Up, or even clothing subscription sites.
By having an open conversation, you can work together to decide how much spending money for college your child needs and establish lifelong financial habits.
Need budgeting help? Use our College Student’s Guide to Budgeting to get started.
