College is most likely the first time your child is truly away on his own. It may also be his first foray into assuming a greater level of financial responsibility.

You want to protect your child, and your household, if poor decisions and mistakes are made. College is an opportunity for you to educate your now-adult child on the correct use of credit cards, ensuring he has proper property and auto insurance coverage, and the basics of managing a budget and saving money.

Here’s a look at the best financial tips for both you and your college student.

1) Develop a higher education strategy

A college education should not relegate you to a lifetime of financial debt.

Jack Wilson, former president of the University of Massachusetts System, recommends looking closely at more affordable colleges and universities that offer an equal or better education than you may receive at a private university.

Across the nation, college tuition increases have outpaced the Consumer Price Index (CPI), housing, and even medical-care costs. From 2003 to 2013, tuition rates skyrocketed 79.5 percent, compared to a 26.7 percent increase in the CPI, according to a U.S. News & World Report study.

“Many parents think price is an indicator of quality. It most certainly is not,” said Wilson, who served as the University of Massachusetts president from 2003 to 2011.   “Many highly ranked colleges and universities charge less than half of what the expensive tier schools do.”

The annual tuition rates can vary significantly between public and private schools. For New Jersey residents attending Rutgers University, on campus students will pay about $25,000 annually compared to a Princeton undergraduate who pays about $53,000. In-state tuition/room and board at SUNY Albany in New York State costs almost $22,000 while just tuition alone at Syracuse University, a private university in Syracuse, NY, carries a price tag of $40,380. Penn State freshman attending The Pennsylvania State University will pay about $27,000 annually compared to a Villanova University education, which will run full-time undergrads about $45,000 a year for tuition plus housing costs.

2) Respect the power of credit cards

In 2012, 1 in 3 college students had credit cards, including 21 percent of all freshman. The average American has nearly $4,900 in credit card debt.

Credit card discipline must start early. Shop carefully for credit cards and compare the details. Sites such as NerdWallet and  BankRate provide in depth comparisons of what you get in a credit card. Teach your child about interest rates, late fees, annual fees, bonus incentives, and more. Set ground rules on how she uses it – for example, she can use it for emergencies but not for dining out. Remember, a credit card is really a quick bank loan – so draw on it wisely.

Most importantly, if your student opens a credit card account, set a small credit limit. This will minimize the pain when it comes time to pay the piper for a bad decision.

3) Live and die by your budget

People handle their money in different ways. College may be the first real opportunity for  you and your student to discover whether they are a planner – or may be destined to live paycheck to paycheck.

A weekly or monthly budget can help him become a planner. Help your student determine his set expenses – food, utilities, rent, books – then separate that money immediately. Discretionary dollars used for “luxury items” such as clothes, entertainment, dining out, or party money, should not be mixed with the essentials – unless you’re sure your son or daughter can truly stay on track.

Tracking a budget can be handled multiple ways through expense software, print ledgers, or even the old envelope system where your money is separated into envelopes and drawn upon during your budget period. Develop a system that works for the student, not necessarily the one you use.

Also, set an invisible “Take a deep breath and evaluate” limit. Some experts recommend setting a $50 psychological barrier when making a purchase. If an item is going to cost $50 or more, your student should think twice about whether it’s a “want” or a “need.” Taking 15 minutes to think before making that purchase can help.

Parents: Be prepared to take a tough love approach. When your student’s money is gone, it’s gone. Financial bailouts by parents should never become a common thing. Some parents may also want the option of accessing their student’s credit card bills to see how they’re using them.

4) Get a checking account

College students will have to pay bills so a checking account is needed. This is also a great budgeting tool.

Here are the basic rules of any checking account:

  • Keep track of your expenses and be sure you know how much is in your account before you write a check
  • A check is a receipt, so it’s important to save old checks if you might need them later
  • Statement: Going through your statement each month is essential to find errors and to understand fees.
  • Reserve credit: You may or may not want a reserve credit option to prevent a bounced check. Keep in mind that the fees and interest can be equal to or even greater than the cost of a credit card. Reserve credit interest is sometimes higher than that of a credit card.

Some students find having two or more checking/savings accounts can be helpful. Consider whether your mandatory expense funds (eg. rent, utilities, food, etc.) should be kept separate from entertainment funds used for movies, or partying on a Saturday night.

Depending on how well a student manages her money, having more than one account to separate your funds might prevent her from calling you at the end of the month when the rent is due or the cellular phone service may be cut.

5) Cash, Debit or Credit?

It seems people use credit or debit cards for almost every purchase nowadays. But don’t forget the value of good old-fashioned cash – it’s accepted almost everywhere and you always know how much you have left.

Cash is a good way to budget, assuming a student has self-control. The drawback is that it can also be stolen from your wallet or that cash envelope left in a dorm room or apartment. Most experts recommend keeping a small amount of cash for your daily expenses. Cash also reduces the quantity of credit receipts that need to be recorded later.

Debit cards pull money directly from your checking account, so you’ll want to track your balance.  The money is removed from your checking account and you don’t have to pay it back to the bank (well, unless you dip into reserve credit). At some banks, you can also set up alerts if your account balances fall below a certain amount. Also research your bank’s fraud liability protection on your debit card – they may or may not offer the same protection as a credit card. There may be fees associated with using a debit card at a foreign ATM or retailer.

Finally, let’s get to credit cards. While we’ve covered credit cards in a previous section, there are other things to consider. The pros: using a credit card responsibly helps build credit, and you are able to pay off the monthly balance each month, you avoid interest fees. Some cards offer reward programs. Consider using a credit card when making online purchases or with a merchant that you may not recognized – if fraud occurs, it won’t affect the balances in your checking account as a debit card would. The cons: If you’re undisciplined, you can quickly find yourself maxed out or unable to make your minimum payment. Teach your student the importance of having excellent credit; it affects everything from loan interest and car insurance rates.

6) Auto Insurance Coverage and Savings

Before taking a car to school, make sure to contact your auto insurance agent. Most insurance companies require you to update your policy to accurately reflect where the vehicle is primarily garaged. Remember to ask about credits or discounts you may qualify for, such as discounts on insurance if your son or daughter gets good grades.

If you’re shopping for a car to take to school, take notice of security and safety options. Those little additions can qualify you for additional discounts on a policy. Most importantly, you want a solid vehicle that can protect him or her if an accident occurs. If your son or daughter is on your insurance policy, you’ll want to check with your agent to ensure they are adequately covered.

Will the roommate borrow the car? Usually, an occasional borrow is no big deal, but if the roommate is using the vehicle regularly, you’ll want to add the driver onto the policy. If the roommate has no insurance and uses your son’s car weekly to get work, chances are he will not be covered in case of an accident. Conversely, if your son or daughter is borrowing a car, you should add them to your coverage.

7) Don’t Stay 5 Years (or more)

The shorter your stay for your undergraduate degree, the less money it will cost you, generally speaking. An extra year could mean a significant increase in your college-debt principal. On average, that only 49 percent of students graduate on time, according to the New York Times.

“After college selection, the failure to graduate in four years is the largest driver of high cost,” added former UMass President Jack Wilson. “Each additional year is extremely expensive.”

Advocates of the five-year plan point out that there are times when an extended stay does work, especially for students who are working their way through school or if a student opts to take an internship or co-op to gain real-world experience while in college.

8) Staying Safe at College:

Despite those grand ivory towers, tens of thousands of college and university students become crime victims every year. In 2011, the FBI Uniform Crime Report listed almost 2,700 violent crimes and more than 87,000 property crimes reported on campuses across the U.S.

A student walking across campus should practice the same basic safety techniques as anyone living in a city. Students should walk at night with a friend or two, keep eyes peeled for danger and shady characters, and obviously keep doors and windows locked at home or in a dorm.

Here are some additional tips:

  • Watch your belongings in public areas, such as a library or study hall. A laptop, tablet or smartphone can quickly disappear if you leave it behind to make a quick trip to the bathroom. Getting a locking device for your laptop helps as well.
  • Program campus security or the college town’s police department number into your cellphone.
  • Keep a mental log of campus security phone locations.
  • Let a friend or family member know where you are. Call someone to let them know you’re safe when you get to your destination.
  • Lock your car or bicycle and check it every now and then. If you’re living on campus, you may not use these modes of transportation often so it’s good to check up on it occasionally.
  • Most campuses offer a safety escort service if you have to walk alone somewhere on campus at night.
  • Consider your residence hall your home and make sure the door is locked, or not propped open. Criminals typically look for easy opportunities to strike.
  • Report suspicious people to authorities.
  • Avoid being in remote areas, or even elevators, with someone who seems suspicious. In most cases, your gut instinct is usually right.

9) Protect Yourself With Renter’s Insurance

A renter’s insurance policy is typically a small amount of money for some good piece of mind. Depending on your insurance company, the average minimum policy runs about $200 to $250.

Erin Brown of Encharter Insurance said students living in a dorm do not need a renter’s policy and would most likely be covered by their parents’ homeowners policy. Apartment dwelling is very different.

“If their kids have an apartment, they need renters insurance, she said. “In most cases, they can do the minimum, which is around $20,000 coverage for contents, and this would also cover loss of use.”

For instance, if the apartment was damaged in a fire, a policy would cover hotel expenses.

A renters policy may have limits though, especially on electronic equipment such as laptops, tablets, etc. An insurance agent can explain what’s covered, and what isn’t.

10) Embrace Frugality

Students should discover their inner cheapskate. Take advantage of incentives that stores and businesses may offer students, such as discounts on restaurants, books, and even new computers and other gadgets.

A college student is at the right target age that is attractive to many businesses, which hope to earn your business for years to come.

Coupons may sound like the stuff your grandmother or reality shows are made of but there are a ton of cost-saving coupons to find. The Sunday newspaper typically offer coupons but look for them selectively by retailers on their websites. You’ll find good coupons for oil change discounts, clothes, and more.

Remember to check out discount clothing or second-hand shops for bargains. Obviously you can find some good bargains online too.

Finally, there’s always the option of borrowing your roommates dress if they’re out of town for the weekend.

11) Save money on college books

College text books are a money pit. Be smart. Sell the textbooks you’ll never use again and search hard for used ones.

Aggressively hunting for college book bargains can save lots of money. Many college text books are available on sites such as eBay and Amazon.com. Many websites cater to the college student who would rather rent than buy, including Chegg, BookRenter, and even Barnes & Noble.

Consider purchasing eBooks, which are a “greener” option. However, MoneyCrashers.com recommends researching the terms and conditions for each ebook closely, as some eBooks have printing limitations, expiration dates, and other restrictions.

Of course, you could always split the cost with someone else in class.

12) Evaluate your spending habits regularly

You should always look at those regular monthly expenses to see if something can go. Buying an expensive coffee shop latte, or lunch at the campus deli can easily add up to $150-$200 a month onto your expenses. Eating at home or bringing your own lunch will save you gobs of money.

Then there are the charges and fees you don’t think about. Are you paying for a streaming music app that you don’t use? Do you really need a cable company DVR or will a basic cable box suffice? Checking your bank statement may remind you that you’re paying for that gym membership at home, but you’re living abroad eight months out of the year.

13) Leave your car at home

OK, it’s cool to have a car at college, but it’s also costly. If you’re living on campus, chances are you may not even need a vehicle, which will most likely spend days upon days parked in some remote lot.

A car costs money. It costs to get that campus parking permit, pay for gas, insurance, repairs, oil changes, etc. Public transportation is usually a more economical choice, albeit less convenient.

Better yet, make friends with someone who has a car and just help her pay for gas now and then.

14) Plan Ahead For Student loans

We’re assuming you have already researched student loans since you (or your child) are heading to college, but we’d be neglect if we failed to mention them. Student loans can take years and years to pay back. It’s essential to read the fine print and know what you’re getting, what the total loan amount to be paid back will be, and to develop a plan of attack to get them done with quickly.

Budget, budget, budget, and try to take the least amount out as possible. If you can work while in school to pay some of the costs, do so. It’ll save you thousands of dollars in the long run.

“Don’t take loans unless you absolutely must,” Wilson said. “Too many pick an overly expensive place or take on overly expensive activities and programs while making up the increased costs with loans. Don’t.”

Additional sources used in this article