Kid college-bound? Teach him how to budget

Q: Our eldest son is off to college, and while he earned his own spending money through high school, I'm concerned about the many new expenses (and temptations) he'll be facing. How can we help him maintain a budget?

A: The best thing is to make a budget that you develop — and keep — together. Here are some steps to consider:

• Estimate income. Discuss the amount of money your son will have access to and where it will come from. Will he receive an allowance from you? Will that money be for specific expenses? How much will he be expected to earn on his own?
• Calculate expenses. Once his income is established you can talk about a reasonable level of expenses and how to meet them. That includes acceptable spending on phone calls, travel, clothing, and "entertainment" (movies, concerts, dates, etc.). Consider a family cell-phone calling plan or personal 800 number for calls. Web sites such as Varsitybooks.com, Bigwords.com, and Textbooks.com offer discounts on textbooks, but watch out for shipping costs. (Hint: Buy in bulk with classmates.) Likewise, you might agree to pay for trips home, but other travel will be his responsibility.

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• Consider credit cards. During the first days of school, your son will be deluged with credit card offers. You may want to give him a joint card instead, with a limit of about $1,000 to help him get used to his new financial freedom without accruing too much debt. This is also a safe way for him to learn about the effect of interest rates and late fees.
• Look into loans. An alternative to credit cards might be low-cost, short-term loans available through campus financial aid offices. Students may be limited to one per semester, but it can get you through the crunch of buying books (or a medical emergency). Like credit cards, banks (including credit unions) should be judged by the cost of using them. Have your son shop around to find an account that best suits your family. Maybe it's one that doesn't require minimum balances, or one that enables your son to write a set number of checks. If your son is taking a computer to school, a crash course in Quicken or one of the other personal finance programs can help keep track of things.
• See how it goes. Finally, don't be too upset if by Thanksgiving you realize all your estimates were off. Simply go back and reevaluate to make your money last through the rest of the year.

Jean Chatzky’s Bottom Line:
This week: When stuff wears out
When your television stops working, it literally stops working. The same goes for your microwave, your washing machine or any number of items throughout your house. However, there are plenty of things that won't tell you when they wear out, and it can pay to know what wears out and when.

Only on TODAY.MSNBc.com! Financial editor Jean Chatzky answers your questions about personal finance. LAST WEEK: Attention shoppers: Better service on aisle five GO TO ALL MONEY MONDAY COLUMNS

Here are a few examples:

Mattress: Should be replaced every eight to 10 years.
Running shoes: Get new ones after 300 to 400 miles.
Toothbrush: Change it with the season or once every three months.
Tires: Varies — and it’s very important to check the tread wear.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Copyright ©2004. For more information, go to her Web site, www.JeanChatzky.com.

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