If you have a post-secondary student at home this summer, now is the time to have that important talk. No, I'm not talking about the birds and the bees; I'm talking about the money talk. You should be asking questions like: How much money do you need to get through the next year at school, and what does a reasonable budget look like?
According to an RBC poll released this week, parents know less about their child's spending during university or college than they may think. While 90 per cent of parents say they know roughly how much debt their child has, only 78 per cent of students agree. And, while more than half of students say they've sometimes hidden how much they spend from their parents, only 33 per cent of parents believe their child was doing so.
Since the investment in education is often spread over a number of stakeholders, including parents, 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. Once the foundation is set, parents and students need to continue the dialogue and talk about responsible spending to make sure the funds last throughout the school year.
Another interesting finding from the poll was that students are significantly more anxious about taking on debt than their parents think they are (69 per cent versus 60 per cent), and they're more worried about having enough money to cover expenses (71 per cent of students versus 57 per cent of parents).
To help reduce stress, talk to your student openly about finances and look at all of the options available. You both need some peace of mind so students can focus on what's most important - getting a good education.
Here are some tips for parents to help prepare for "the talk" this fall:
1. Make a budget, and revisit it often: Preparing a budget is one of the best ways to help your student manage their finances and stay in good financial shape when they are at school. Suggest looking for online tracking tools that automatically keeps track of spending so they can easily see if they're sticking to the budget.
2. Research: Ensure your student has checked online sources to see if they qualify for free money that they don't have to pay back; like scholarships, bursaries, or grants. A bit of research could save thousands of dollars.
3. Only borrow what they have to: Your student's school budget should include all the money that they have for education, like savings, RESPs and scholarships. Compare that to the total cost of school, both hard and discretionary costs, and suggest they only borrow what they really need to fill the gap.
4. Take advantage of student status: Remind your student to ask for student discounts everywhere they go such as hair salon, retailers and restaurants. Also, get them to evaluate items such transportation (can they take advantage of public transit vs owning a car); textbooks (can they rent textbooks vs buy new) and mobile plan (call to find out about student plans and ensure they're only paying for what they need).
ALSO ON HUFFPOST: