PHILADELPHIA (CBS) – It’s the time of year when hundreds of thousands of college students head back to school and we all know what that means, money. College can be a costly time for both parents and kids. 3 On Your Side Consumer Reporter Jim Donovan has some advice on how to prepare yourself and your child for the financial challenges ahead.

It all begins with a conversation. It’s critical to sit down with your child and talk dollars and cents before they head off to school and have to manage on their own.

College expenses don’t end at tuition or room and board. There are a lot of other costs to consider. One survey shows that students can expect to spend an average of $1,137 on textbooks and supplies alone. Ted Massaro, the president of M Financial Planning Services says, “I think that it is critical that, today especially, that children have a firm grasp of cost of living, cost of college, cost of just incidentals.”

Massaro’s own son will be heading off to college next week. He says it’s important that parents have a discussion about money before their kids leave and that they lay down some ground rules.

According to Massaro, “He will have a budgeted amount. He has to come back to me each month at the end of the month, and say here is what I spent my money on. If he has a crisis obviously I will be there for him. But if he exceeds his budgeted amount, shame on him, he has to work within that budget.

The budget should include a checklist of who pays for what, including books, meals, clothing, gas, transportation, insurance, even cell phone bills.

Massaro recommends that parents set up a joint bank account linked to a debit card. Massaro says, “He has complete accountability for it, of course I have complete access to it so that I can see when exactly the money is flowing out.” But he warns to skip the overdraft. He says, “No overdraft. Overdraft is indirectly like a credit card, and they aren’t going to understand the consequences of ‘oh you mean I spent more than I actually had in my account?’

Speaking of credit cards, Massaro says he isn’t co-signing to allow his son to get one. But for parents who want their children to slowly build up their own credit history with a card, he recommends that it have a very low credit limit and that parents monitor its use.

For more information on M Financial Planning Services, CLICK HERE.

Reported by Jim Donovan

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