Besides the burden of student loans and books, statistics show that four-year degree students spend close to $53,000 on personal expenses. That’s a lot for students who may not even be working jobs while in school. LittleThings spoke with Jennifer Seitz, CFEI® and Director of Education at family finance company Greenlight on financial tips for college freshmen to help give them a financially savvy start.
Not surprisingly, Seitz says parents should start saving early: “Setting kids up for college is a smart step that can help alleviate financial burdens when the time comes for them to pursue college education. Generally, saving early and consistently is a great rule of thumb, but the strategy, savings vehicles, and the exact amount needed can vary based on parents’ individual circumstances.”
There are steps for parents to consider:
Set Realistic Goals:
“Estimate the future cost of college education based on current tuition fees and expected inflation rates. While it's challenging to predict precisely, having a ballpark figure will help set savings goals,” says Seitz.
Contribute Regularly:
“Establish a routine to contribute to the college savings plan consistently,” advises Seitz. “Even if the contributions are small, regular investments will add up over time. Consider involving your kids in the contribution process. For example, you could ask them to take even $5 out of their allowance each month and explain why and how people who save consistently for a long-term goal can benefit them in the long run — especially once they need to start saving for their first car, home, or retirement.”
Create a College Savings Plan:
“There are several college savings plans available, such as 529 plans, Coverdell Education Savings Accounts (ESA), and custodial accounts (UTMA/UGMA),” notes Seitz. “Each has its own advantages and tax implications, so parents should research and select the one that best suits their financial situation. Your employer might offer access or even a match for an educational savings vehicle. If you’re a working parent, make sure to explore what’s in your financial wellness benefits package. Greenlight also offers Investing for Parents, an easy, flexible way for parents to invest in their children’s futures. Using the Greenlight app, parents are able to research stocks and ETFs, create their own investment portfolio with fund recommendations based on their goals.”
Seek Professional Advice:
“Consulting a financial advisor can help you determine the best savings approach and accounts needed based on your family's financial income and goals,” says Seitz.
Parents can teach their kids the basics of savings from an early age, but once college rolls around, it’s time to start exploring other ways to save. For example, as your child gets closer to graduating high school, they can research and apply for scholarships and financial aid programs to help reduce college expenses.
“Start by checking with their school's financial aid office, as they often have information on local and institutional scholarships,” says Seitz. “Another valuable resource is professional organizations or community groups related to one's field of study or interests, as they frequently offer scholarships. Don’t forget to explore government-sponsored programs and databases, like the US Department of Labor's scholarship search tool. By tapping into these diverse resources, your children can increase their chances of finding scholarships that truly align with their unique qualifications and aspirations.”
Before freshman year at college begins, it’s time to set budgets. “Calculate all the expenses and decide how they will be covered and paid,” says Seitz. “Not just tuition fees and room and board, but all educational and living expenses—like groceries, transportation, and daily costs. Include rent and utilities if living off campus. Students need to know now how much money is available in each category, and be prepared to implement that budget week by week or month by month. Reviewing the finances in detail helps ensure that expectations are clear.”
Some families may have the assets to set up a monthly allowance for their college kids. Others should encourage their child to get a job, if class schedule and workload permit, according to Seitz.
“Handing a credit card to kids or even college-age children may worry some parents, but with the right education and preparation, it can be a valuable learning experience,” says Seitz. “If your kids are under 18, you can add them as authorized users on your cards. They will learn to use responsibly under your supervision while experiencing first-hand what it means to have financial responsibility and, most importantly, a good credit score. Just like teaching them to ride a bike, you can start with 'training wheels,' a secured credit card with a limited balance. It's an opportunity for them to grasp the concept of spending within their means, avoiding unhealthy debt, and even earning rewards.”
Helping your child determine needs vs. wants will help them balance spending. “With all of the college-related expenses to consider, I'd tell students to focus on needs over wants, especially for dorm room shopping,” advises Seitz. “With designer dorm room decor taking over TikTok, it can be easy to get caught up in the items we want more than the ones we need with such a big and exciting move — and for many teens, it's their first time decorating their own space. They should carefully consider practical needs like storage for their room vs. their wants. Fancy bedding or high-tech electronics may be important to some, and it's fine as long as they understand the opportunity cost. Also look for a sale! Comparison shopping should be part of every back-to-school plan.”
Utilizing cash back benefits and meal plans on campus are some ways to save money. “Parents can make the most of credit card cashback if they research for the ones catering to families,” says Seitz. “Make sure you’re selecting one strategically — consider if the rewards are specifically tailored to family expenses, like groceries, gas, or school supplies. Know the upper limit of cashback for your cards, and maximize it by using the card for everyday purchases! But always remember to pay it off in full each month to avoid interest charges — you can also set a good example for your children of managing debt. Don’t forget to take advantage of special promotions and sign-up bonuses as well, as they can boost rewards earnings. Keeping track of spending and staying within a budget will ensure that the cash back earned is a true benefit and not outweighed by debt. With smart planning and responsible usage, you can enjoy the perks of credit card cashback to help offset family expenses and save money in the long run.”
Seitz shares some additional financial tips your children can keep in mind as they start thinking about how to navigate their freshman year in college:
Track Spending:
“Keep a record of all your expenses to understand where your money is going,” says Seitz. “Use budgeting apps or spreadsheets to categorize your spending and identify areas where you can cut back if necessary. Remember to be realistic about what you can do with your allowance and prioritize essential expenses — such as groceries — over discretionary spending like dining out.”
Save on Textbooks:
“Textbooks can be pricey as you may know,” says Seitz. “Consider buying used or renting textbooks instead of purchasing new ones.”
Take Advantage of Student Discounts:
“Many businesses offer discounts to college students, so make sure to ask if there's a student discount available whenever you're making a purchase,” says Seitz. “This should help you save money across transportation, entertainment, traveling, and beyond.”
