Parents know less about their child’s spending during university or college than they may think, according to the latest 2014 RBC Student Finances Poll.
While nine out of 10 parents (90 per cent) say they know roughly how much debt their child has, only 78 per cent of students agree. More than half of students (55 per cent) say they’ve sometimes hidden how much they spend from their parents, but only about one-third (33 per cent) of parents believe their child has sometimes hidden how they are spending.
A large majority (76 per cent) of students say they are confident in their ability to manage their finances but many students (87 per cent) believe they still have a lot to learn. And while 89 per cent of parents believe they’ve been a good financial role model, fewer students (80 per cent) believe that to be true.
“We meet with students and parents throughout the year, and whether first year, third year or planning ahead, we want to know: have parents and students had ‘the talk?’” said Melissa Jarman, director of student banking at RBC.
“The financial talk is not always easy but it needs to happen,” said Jarman. “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 said 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. A conversation with a financial advisor about a clearly defined budget or plan can also be a great idea, to help ensure that finances remain a priority, she added.
The talk can also help alleviate worry and stress. Sometimes experience counts, and mom or dad may know best.
According to the poll, parents are much less likely to believe their child is worried about having enough money to cover expenses (57 per cent versus 71 per cent of students). Students are also more anxious about taking on debt than their parents think they are (69 per cent versus 60 per cent of parents).
“Between acceptance letters, picking my courses and planning for school, I was already so overwhelmed with decisions. The next looming decision was, ‘how do I pay for this?’” said Alex Ho of Milton, ON. “I sat down with my parents to have the talk – how can I make this a reality? From there, I knew I had some financial support, but more importantly, I had a path in front of me. Part of that path led me to our RBC financial advisor who helped me make a plan to see me through my time at school.”
Jarman said students have a lot more anxiety than parents might think when it comes to their finances surrounding post-secondary school.
“To help reduce stress, parents and students need to speak openly about finances and look at what options are available. Parents and students alike need some peace of mind so students can focus on education, and not let financial worries wear them down.”
Here are some tips for students as they prepare for “the talk” this fall:
– Make a budget, and revisit it often: Preparing a budget is the best way to stay in good financial shape when you are away at school. There are a number of online tracking tools that are available, including RBC’s myFinanceTracker, which automatically keeps track of your spending so you can easily see if you’re sticking to your budget.
– Do your research: Check online sources to see if you qualify for free money that you don’t have to pay back; like scholarships, bursaries, or grants. A bit of research could save you thousands of dollars.
– Only borrow what you have to: Your budget will include all the money that you have for education, like savings, RESPs and scholarships. Compare that to the total cost of school, both hard and discretionary costs, and only borrow what you need to fill in the gap.
– Take advantage of your student status: Ask for student discounts anywhere you go: hair salon, retailers and most restaurants around campus. Do you need your own car or can you take advantage of public transit? Can you rent your textbooks or buy used from your campus bookstore? Can you change your mobile plan to ensure you’re only paying for what you need?