Wednesday, June 1, 2016

Dollars and Good Sense

Let's push aside paying for tuition, books and a meal plan for the moment.

Instead, let's talk about coffee, snacks, t-shirts, student discounts at theaters, concerts, museums, sports events and retailers. Oh, and those to-die-for jeans.

Cash in a weekly envelope for expenses is so stone age. There are a range of credit-card and app options for the first-time credit user. But pulling out the credit card or phone Google Wallet or Apple Pay is way too easy at the front end for teen-agers when mom or dad get the bill 30 days later.

So don't let Victoria even start loading up the van before you have had the family chat about expenses--as in "other."

Make this at least a two-day process:

On Day One, parents and child independently pull together a list of monthly probable expenses...Laundry, personal care, public/campus transportation and/or gas (for the rare freshman who really needs a car), school supplies, cell phone/tablet wi-fi, entertainment, game/movie rentals, haircuts, etc.

On Day Two, swap lists. Hopefully, the numbers are comparable. If not, negotiate and convince offspring this will be a work in progress and adjusted as school term flies by. 
Next, figure out how everybody is comfortable with a plan for paying for all of the expenses. Do the math...assess the burdens.

On-campus/off-campus jobs should be discussed at this point. Even if your son is making $50 a week doing this or that on weekends to defray costs, it is a great life lesson.

The $25 (or $50) rule: Make it clear there are always going to be opportunity or unexpected expenses. Decide now if your child has to communicate a bigger purchase before it is made.

Do the research. Check out and compare credit cards, debit cards or consider a prepaid Visa/MasterCard. Traditional and online banks offer student checking accounts with a debit card and ATM access. Check out Bluebird by American Express as an alternative to a checking account. And also consider a PayPal debit card. I find PayPal indispensible and the debit card gives parents full access, offers spending limits and automated alerts. And valuable in an emergency: Parents can initiate a transfer in seconds if a student needs money immediately.

So ask around on campus what upperclassmen use for that late-night latte, check the banks and ATMs on or near campus.

Lastly, be careful of some campus-sponsored bank cards. Some charge 50 cents for every transaction and levy an overdraft charge of $38 and $3 for each out-of-network ATM transaction. Watch the Consumers Union video on college cards.

Revisit the budget every 30 days until it shakes out for all. No surprises are a good thing. A responsible money manager allows everyone to sleep a little better.

-Mike Ryan