By Katy Hopkins

Talk about finances now, but know when to let your child slip up

Heading off to freshman year of college is a gateway to new experiences -- a time to explore academic interests, meet new people, and, for some students, embrace newfound financial independence.

"Sometimes, this is the first time that they're actually starting to manage money on their own, without their parents being right there with them to help them along the way," says Doug Schantz, director of the Office of Student Accounts at Ohio's Wittenberg University and founder of "For those of us who have been managing our finances, you assume that this is basic financial information -- but the fact of the matter is, it really isn't."

For parents, preparing your student to be financially successful in college is a delicate balance between supplying enough funds and know-how for your child to get by and becoming so overly involved that he or she can't fully flourish, both personally and financially. Here's what to brief your students on before they head off to school -- and what you should let your children learn on their own:

1. Don't deposit and dash:

For parents who plan to supply their student with extra spending money, realize that your offer is both incredibly generous and potentially hazardous, if you're doling out a semester or year's worth of cash without a loose framework of how that money should be divided, notes Houston Dougharty, vice president of student affairs at Grinnell College in Iowa. "Too often, I have worked with [parents] who, upon dropping off their student, say, 'I've put $2,000 in your checking account for the year,' -- and then that student is the most generous pizza buyer for the first month of college," Dougharty says. "[By] October, they don't have money to do laundry."

Instead, talk to your students about the importance of intentional, incremental budgeting. Help them set up a month-to-month plan that allows for unexpected expenses, such as an off-campus dinner with hall mates or a few extra loads of wash. That conversation is also a great opportunity to be honest about what they can assume from you; if you expect your student to save money to cover the last two years of tuition, for example, or if he or she will be paying for textbooks out of pocket, mention that now, experts recommend.

2. Embrace -- and limit -- financial slip-ups:

After helping with a budget framework, step out of the process and leave it to your son or daughter to make it work, recommends Jerry Weichman, a clinical psychologist in Newport Beach, Calif. "If your kid runs out of money [one] month, they're not going to starve -- they can buy some Ramen," Weichman says. "One of the best things parents can do is to allow your kids to struggle financially for a little bit if they mismanage their money, because the consequences are so much easier for them now versus what that would equate to when they're adults. You learn so much more from your mistakes than your successes."

Still, parents who remove themselves don't have to leave their students completely helpless. "You can put limits on how dangerous financial experiences can be," notes June Walbert, financial planner at USAA Financial Planning Services. Encourage your student to get a debit card or a credit card with a low spending limit, she recommends, and recap his or her financial experience together at the end of each semester or school year. "Much of the learning during college happen outside the confines of the classroom, especially on the personal finance front," Walbert says. "We want students to be free to make financial decisions, but within boundaries."

3. Encourage financial freedom:

Often, a part-time job -- usually for about 10 hours a week -- can help increase a student's productivity, organization, and time management skills, claims Grinnell College's Dougharty, in addition to providing a little financial leeway. If your student works, suggest the earnings be used as spending money -- whether he or she chooses to put it toward laundry, occasional meals off campus, or extracurricular activities -- rather than set costs such as tuition or room and board, Dougharty recommends. By choosing where to allocate earnings, students actively make a connection between money earned and money spent, and will likely be more effective at budgeting after college since, Dougharty says, "That's what real life is like."

4. Utilize web resources:

Though releasing the tether from your soon-to-be college student may still be a terrifying thought, rest assured that neither you nor your student needs to tackle the upcoming challenges alone. With the help of the Internet, students have financial management resources at their fingertips. Check out for help with your budget, recommends Katherine Cohen, founder of; explore the government-run for advice on making informed financial decisions; or see if your school has a virtual financial literacy program that makes money issues fun and understandable, such as the program Schantz is currently implementing at Wittenberg University.

And if it gets tough making the shift from "daily parent to occasional coach," as Grinnell's Dougharty puts it, keep in mind that, after years of personal training within your family unit, allowing your student some leeway is a healthy route to tackling problems in school and beyond.

"Money management, conserving, saving for what you need, and tracking your expenses are parts of what any adult needs to be successful, let alone a college student," counselor Weichman says. "Parents are teaching their kids not just how to deal with college, but how to deal with life."

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Steps to Financially Prepare Your Student for College