Family finances: Mom, Dad, kids and money

Family finances

Many young people look at post-secondary education as a way to achieve independence from their parents. Heading off to school allows for more freedom and serves as an escape from the watchful eye of mom or dad. During this transitional stage, parents try to keep tabs on their children’s financial situation but a recent poll from RBC suggests that many parents are misinformed.

The 2014 RBC Student Finances Poll found stark differences in the perceptions of parents and students. Nine out of ten parents think they are aware of the level of debt their child has, but only 78 percent of students agree. One of the causes of this discrepancy may be in the spending habits of the students combined with how much information about their finances they share with their parents. While just one-third of parents think that their child has hidden the truth about their spending with them, over 55 percent of students admit to being dishonest about their spending.

Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, says proper communication is important for solid family finances.

“We often assume we know what is happening when we are actually in the dark,” says Schwartz. “Why not sit down with your kids or your parents and have a full discussion about money. This will help stop small money problems from becoming more serious.”

Melissa Jarmen, Director of Student Banking at RBC, adds that tuition expenses are often a shared expense that requires communication –

“The financial talk is not always easy, but it needs to happen,” says Jarmen. “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.”

Consolidated Credit believes that parents and children should talk about their financial situation and offers the following tips to ensure the discussion is effective –

  • Lay it all out – It’s important to avoid holding anything back when having a serious discussion. Both sides need to share exactly what the situation is. If a child is having trouble making ends meet and is skipping meals to get by, it’s important to share that. Conversely, if mom and dad are feeling some financial pressure due to their financial support, don’t shy away from sharing that. Getting on the same page is the only way the story will have a happy ending.
  • Write it all down – When discussing personal finances, don’t trust your memory. Keep notes of everything you speak about so you can refer to it afterwards. This note-taking should include any difficulties you have had with making ends meet and a detailed budget for the future. Writing down specific problems with specific solutions will ensure you meet your goals and achieve financial success.
  • Learn – Many young people are intimidated by things like credit card debt and debt management. It’s not something they experienced while in high school and they don’t know where to begin. Parents are an excellent resource to learn from. They can give you informal credit or debt counselling. Make sure to ask questions and listen to the answer. Conversely, parents need to be willing to share their years of wisdom with their child. Talking about money issues can’t be a taboo if you want to pass down sound financial advice to your children.

If you want to learn more about making responsible financial decisions, check out Consolidated Credit’s free Personal Finance educational section. If you’re struggling with debt, call one of our trained counsellors today at 1-888-294-3130 for a free debt analysis.

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