SunTrust Bank Home SunTrust Bank Home

Personal Finance Lessons: Budget Planning for College Students


Teach your child to create a budget and ace money management

Share current LOB: personal-banking

As students head off to college this fall, they’ll learn a lot more than what’s in their textbooks or lecture notes. Living on their own will provide a wealth of real-world lessons, including the importance of keeping to a monthly budget.

A student’s monthly budget may seem small, but college students’ discretionary spending hit $120 billion in 2012, according to a recent survey.1 Students who don’t manage money responsibly can find themselves with credit card debt, a shopping addiction or having to deal with added anxiety in an already stressful environment.

“A big part of managing money is talking about it with your child,” says Tahira Hira, an Iowa State University professor of personal finance and consumer economics and a senior policy advisor to President Obama and President Bush. “Parents have the most important impact on their child’s financial behavior.”

“Parents have the most important impact on their child’s financial behavior.”

Help your student create a sound financial plan to ensure he or she is not living off ramen noodles by March. Here’s how to get started.

Assess your student’s income. College students’ spending money often comes from multiple sources: help from parents, savings, part-time jobs and student loans. As a starting point for budget planning, encourage your student to add up the money they expect to have coming in. “Without that information, it’s difficult to plan your spending,” says Hira. Students who know how much money they are bringing in will have a better idea of how to allocate funds and when to stop spending.

Categorize expenses. Understanding essential and nonessential expenses can help students prioritize and find creative ways to reduce discretionary spending. Some expenses—like textbooks, tuition and rent—are necessary and virtually nonnegotiable once you sign a lease or sign up for a class. Others—like food, clothing and transportation—have more wiggle room. As Hira points out, everyone needs to eat, but food costs vary depending on where you buy and what you choose. Still other expenses—like recreational activities—are optional and easier to control. If your student’s monthly budget is already stretched thin by higher-priority expenses, suggest cutting spending on concerts, sporting events or dinners out, for instance, while still covering the rent and grocery bill.

Check in monthly. Teaching your child to manage money is an ongoing process, not a one-time discussion. Hira suggests having a monthly financial chat about budget planning. Ask how things are going and if he or she is having any trouble paying bills. “The quicker we know what is happening, the sooner we can make any necessary corrections and help our kids get back on their feet,” she says. Mistakes can serve as teachable moments: Instead of paying your child’s credit card bill after he or she goes over budget, spend some time together brainstorming ways to avoid future missteps and perhaps bring in extra money. Having your child take personal responsibility for the bill reinforces this lesson.


1 "College Explorer 2012", Re:Fuel and Crux Research

This content is educational in nature and is not an advertisement for a loan or business solicitation. It does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related Content

  • Student Debt Image Father and Daughter talking about finances

    Helping your kids manage student loan debt

    In 2016, nearly seven out of every 10 graduating seniors needed to borrow for their educations and are on average saddled with in excess of $37,000 of student debt as they enter the workforce. Not only does this emerging “debt crisis” place an immediate heavy burden on the shoulders of new graduates, it can have an adverse long-term impact on both the individual and the economy.

  • What investments can I use to save for college?

    This tool explains some of the options you have to save for college based on your income, tax filing status, and intended savings.

  • Money management strategies to help you save money and enjoy the occasional splurge

    Infographic: Keep Overspending from Busting Your Budget

    It's tempting to spend money to keep up with your friends and family. But splurging can lead to stress if you don't plan ahead. Check out this infographic for strategies to help you indulge on occasion without the guilt.

  • Juggling College and a Part-Time Job

    Manage your studies and work through proper time management.