Parents know less about their child’s spending during university or college than they may think.
In fact, while 90% say they know how much debt their child has, only 78% of students agree, finds an RBC poll. More than half of students have sometimes hidden how much they spend from their parents, but only 33% of parents believe this fact.
Further, 87% of students think they still have a lot to learn when managing their finances.
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“The financial talk is not always easy, but it needs to happen,” says Melissa Jarman, director, Student Banking, RBC. “Investing in education is often spread over a number of stakeholders, including parents, so there needs to be an open discussion about where the money to fund that education is coming from, who’s responsible for how much, and when.”
She adds, “Once the foundation is set, parents and students need to continue the dialogue and cover advice for responsible spending to make sure the funds last throughout the school year.”
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The talk can also help alleviate worry and stress. According to the poll, parents are less likely to believe their child is worried about having enough money to cover expenses (57% versus 71% of students). Students are also more anxious about taking on debt than their parents think they are (69% versus 60% of parents).
Here are some tips to get clients to open up with their kids:
- Make a budget, and revisit it often. Tell clients that preparing a budget is the best way to stay in good financial shape when kids are away at school. There are a number of online tracking tools that automatically keep track of spending so kids can easily see if they’re sticking to a budget.
- Do your research. Kids can check online sources to see if they qualify for free money that they don’t have to pay back; like scholarships, bursaries, or grants. This could save parents thousands of dollars.
- Only borrow when necessary. The budget will include all the money that kids have for education, like savings, RESPs and scholarships. Compare that to the total cost of school, both hard and discretionary costs. Clients should only borrow what they need to fill the gap.
- Take advantage of student status. Tell kids to ask for student discounts anywhere they go: hair salon, retailers and most restaurants around campus. Look at other savings options as well, including whether the child needs his own car or can take public transit; whether he can rent textbooks or buy from used book stores; or if he can change his mobile plan to ensure he’s only paying for what he needs.