While the sign on the Bank of Mom and Dad may always read “open”, post-secondary students should plan ahead with their budgeting to avoid multiple visits and withdrawals.
A new report from CIBC shows that, despite careful planning and budgeting at the outset of the school year, the majority of post-secondary students are using their parents as their “personal ATM’s” because they run out of money before the school year ends.
The survey showed that:
- 51 per cent of parents with kids attending a post-secondary institution reported that their kids have asked for extra financial help because their bank accounts ran dry during the school year.
- Despite this, 86 per cent of parents believe they are good role models when it comes to financial planning.
What is perhaps one of the more interesting points drawn out by the study is this lack of budgeting skills is the same across the board- no matter what the household income is. So where is this break down happening? Start with open communication- and a plan.
“When you are heading off to school to further your education, you should take the opportunity to learn some real-life lessons as well, especially when it comes to money management,” says Jeff Schwartz, executive director at the Consolidated Credit Counseling Services of Canada. “Learning how to set and keep to a budget will not only help you right now, but is a vital tool to your financial success later in life.”
“This study shows another valid point; it doesn’t matter how much money you make. If you spend beyond your means, you’ll run out of money, regardless.”
So, before you get too deep into the school year, it is time for a family meeting.
Set the budget
Setting a budget for the school year should be a collaborative effort, weighing out needs and wants from both the parents’ and the children’s points of view. Come up with detailed line items that are not only reasonable, but are able to be sustained over the year.
Don’t forget to leave a cushion in the event of an emergency, or if your calculations are a little bit off.
If you are looking at an empty bank balance at the end of the month (or the end of the school year, as the case may be) you may be wondering where your money has gone. Simply, this is in part because you are literally wondering where your money has gone-rather than tracking it.
Keep your receipts so that you can balance your books. This not only helps give a realistic snapshot of your spending, it shows parents that you were responsible, strengthening your case should you need to dip back into the Bank of Mom and Dad.
While you may have laid everything out in great accuracy on paper, things happen over the course of the school year (or any year). There could be a change at home, like a job loss or illness, which would make parents less able to help financially.
Discuss scenarios. What would you do in that instance? What sort of student assistance is available? Could you get a job, or increase the hours for a current job?
For parents, being a role model through good money management is great, but the example has to translate into tools to set a budget- and to stick to it.
Are you attending school and trying to balance your books while hitting the books? Be proactive and learn how to manage your money so that you’ve got a steady cash flow, and you can avoid returning to your parents for additional funds. Remember, the last thing you want is for and your parents to turn to debt for more money. Call one of our trained credit counsellors [PHONE _NUMBER] or check out our free online debt analysis tool to get started