It’s a time-honored tradition that is a dream come true – and a potential nightmare. How do parents enthusiastically prepare their children for college and their first taste of independence, while also warning them about the pitfalls that can lead to financial disaster?

Students who get an early handle on their income and spending can avoid the stress of being unable to pay off bills and having to work more and more hours to meet financial obligations.

While they may have what seems like a large amount of money from student loans, financial aid, hard-earned savings and financial support from their family, expenditures can quickly snowball if they are not monitored. Like anybody else, college students are usually surprised at how fast the little expenses add up. For instance, it may come as a shock to them to learn that a daily cup of “designer” coffee brewed by the local barista can easily exceed $50 a month.

That’s why the basics of budgeting, how to manage a checking account and the importance of saving are so important. This knowledge will be infinitely helpful when parents encourage students to adopt a spending plan early in their first semester and stick to it.

The process of developing a budget for a college student is basically the same as it is for everyone else. Add up income, such as savings from summer jobs, financial support from parents, financial aid from school, scholarships and income from a current job (if they have one). Then, add up expenses, such as tuition, books, groceries, gas, pizza and Culture. Even if the totals “break even,” there is probably still room to cut out some unnecessary expenses so your student can save for a last minute opportunity to enjoy a night out with friends or purchase additional school supplies.

Parents should also give their college-age children realistic expectations about the amount and frequency of the financial support they’ll give the student. Also, parents should tell the student whether or not they need to get a job to contribute to the rising costs of college tuition and associated expenses. Telling a college-age child what they will and won’t receive in terms of a “parental cash advance” is a powerful tool toward motivating them to prioritize and manage their expenses as much as possible.

One other large-scale hurdle for college students is not falling for enticing credit card offers that seem to make it easy to “pay” for clothes, gas, pizza and concert tickets. Students receive an average of 25 to 50 card solicitations per semester, according to a 2008 study by United College Marketing Services.

Plus, the average undergraduate has $2,200 in credit card debt, while the average graduate student has $5,800 in credit card debt, according to Nellie Mae, the nation’s largest maker of student loans. Since so many student credit cards have high annual percentage rates, the longer they wait to pay off balances, the worse it gets. Making minimum payments would require more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate.

There is some relief on the horizon for prolific credit card marketing.

President Obama recently signed into law the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 which goes into effect in June 2010 and contains certain rules and restrictions to protect college-age students. It prohibits credit card companies from offering free merchandise to college students in exchange for signing up for a credit card account when the offer is made on or near the college campus or at a college event. It also prohibits creditors from randomly issuing a credit card to students who have not applied for one and requires that students who do apply submit proof of income and their financial history.

In a section entitled “Sense of the Congress,” a recommendation without the force of the law, the Act also encourages creditors to notify colleges if they will be marketing on their campus, encourages colleges to limit the number of locations where this marketing will take place and recommends colleges offer credit card and debt education sessions as a part of new student orientation.

Starting college is certainly a huge step that most students take with equally big expectations. If parents have invested over the years in their children’s future by instilling a sense of financial responsibility coupled with solid education about how to handle basic budgeting, the college experience can be memorable and life-transforming in positive ways without the lingering stress and anxiety that results from poor money management.

Rob West is president and principal of Trust House, Inc. He is also a seminar instructor for Larry Burkett’s Crown Financial Ministries and co-hosts weekly interactive radio programs aired on 90.3FM WAFG. He is also the director of training for Kingdom Advisors. For information or to book a speaking engagement, call 954-351-2088. Please send questions and comments to [email protected].

The information in this article is for information purposes only and does not constitute advice. You should not rely on any information in this article to make (or refrain from making) any decision or take (or refrain from taking) any action.