Creating a Monthly Allowance for Your College StudentAugust 1, 2022
When you’re preparing to send your child to school, you may be thinking about the cost of college, your student’s living arrangements and whether they need a meal plan. But what about other monthly expenses? Eating out, socializing, clothes, and school supplies are also regular expenses they must plan for.
Will your student cover these expenses, or do you plan to help cover those costs? If you’re thinking about providing an allowance for your college student, here are a few pros and cons to consider:
Pros of Giving an Allowance for a College Student
Planning a monthly allowance for your college student can benefit them in many ways:
- Allows focus to remain on school. Students who do not have to work while taking classes have more time to study, which can help them excel in school.
- Helps them enjoy the full college experience. Receiving a monthly allowance offers more freedom to enjoy the social aspects of college. Being involved in student groups and extracurricular activities can teach students the value of making friends, networking with others, and getting involved in their communities.
- Minimizes tough money decisions. If your college student has a limited income that doesn’t cover all their monthly expenses, they may have to make some difficult financial choices. If a student uses a monthly allowance wisely, it can help mitigate financial stress.
- Teaches your student budgeting strategies. Having a monthly allowance in college allows students to learn about smart saving and spending before entering the professional world. Plus, it enables them to practice using budgeting tools for college students.
Cons of Giving a Monthly Allowance for a College Student
There are some drawbacks to consider if you provide an allowance for your college student.
- Less sense of financial ownership. Students that receive an allowance for college may feel less of a sense of financial ownership and, therefore, be less responsible with their budgets. However, this can be offset by teaching students the power of smart financial management before they leave for school.
- Potential for relational stress. One potential drawback of providing a monthly allowance to your college student is the possibility of putting financial strain on your relationship. With that in mind, it’s important to clearly outline your expectations for the funds ahead of time.
- Hamper Your Retirement Savings. If you don’t have the means to both save for your retirement and provide a monthly allowance for your college student, your retirement should take precedence. Be sure your retirement savings are on track if you choose to provide financial help to your student.
Average Spending Money for College Students
If you decide to provide a monthly allowance for your college student, the next question becomes, how much allowance should a college student get? According to Admissionly, depending on how strictly your student budgets, their average monthly spending will likely fall between $1,400 and $2,082 for necessity and non-necessity expenses combined.
No matter how much you want to provide, below are some helpful tips to implement an allowance for your college student:
- Decide upfront what you will cover. Once you decide what you would like to help pay for, this can help determine how much allowance would be appropriate.
- Outline your expectations for the money. Have an honest conversation with your student, letting them know what the allowance can be used for. Whether the allowance is only to be used for groceries and rent, or you’re willing to allow for a few fun expenses, let them know ahead of time.
- Lay out any rules for receiving the allowance. Be specific about any stipulations they must meet to receive the money, such as getting certain grades. Creating guidelines can help prevent disagreements.
- Encourage a summer job. Having your child work in the summer allows for greater responsibility and can ease your financial burden. Check out our blog post on the best jobs for college students for ideas.
The decision of whether to provide a monthly allowance for a college student is personal and depends on your financial circumstances. Remember that if you decide to provide an allowance, the amount should fit comfortably in your budget.
Hopefully, weighing the pros and cons can help you make a decision that can be easily implemented by following the best practices.