If your house was anything like mine growing up, then money was a bit of a taboo subject. In fact, it seemed to be a taboo subject amongst most of the adults I talked to now that I think about. I’m not sure why that is, but I’m glad that I’m a teacher and my salary is public information so it’s not really a secret. I had no idea how much money my parents made growing up, and while I knew they were putting some money away for me to pursue post-secondary studies, I never really knew how much, or what percentage I was responsible for paying or anything like that. This eventually led to some conversations that felt awkward and tension-filled when there was no logical or rational reason for that to occur. Remember that money is merely a tool that allows us to pursue our goals or enjoy nice things! It should be nothing to be timid or taboo about.
You Need an Income Number To Make a Budget
If you’re not sure what your parents are able to contribute to your post-secondary endeavour then how can you create a truly reliable budget to refer to throughout your year. Make no mistake, I’m not saying that your parents HAVE to help you with your studies or even that they SHOULD help you. I think there are some pretty good reasons for parents to try and help their children attain a post-secondary education, I fully plan to do so for my children (IF I choose to have any), and I’m very thankful for the financial support that my parents gave me; however, the point of have “The Money Talk” is not to guilt your parents into giving you money. Ultimately it is their money that they have likely worked very hard for and it is up to them how it should be spent. What I am saying is that if your parents are going to help you out, in order to get the most out of their money and yours it is important to know exactly what the overall financial picture is, and the sooner this is established the better.
But Mom, Barack Says It’s a Hand Up, Not a Hand Out!
You need to have a fairly specific idea as to how much your parents plan to contribute each year in order to make an informed decision on if you should look for a part-time job (which consequently may affect your course selection), or even if you should apply for student loans. The other factor that students and their parents need to take into account that not all financial support has to be in the form of cash. I know of several students who took it for granted that they would be allowed to live at home rent-free as they went through college or university. The parents had taken it for granted that once a child was 18 they should be contributing something to the household finances (even if it was only a token amount). This eventually led to a blow-up when it could have been headed off at the pass by having a calm sit-down conversation about financial goals and what was expected of each party in the agreement. My parents helped me out in all kinds of ways that didn’t include a direct deposit into my bank account. I got to live at home in the summers rent-free (in return for doing a lot of the household chores), I got to eat their groceries whenever I wanted, and I also could probably get away with “borrowing” household items like extra laundry detergent when I came home one weekends. These items might seem small when you first sit down to think about them, but trust me, the first time you see your precious student loan chewed up by buying bounce sheets and Febreeze you’ll think twice about the value of “the little things”.
In terms of your tax preparation and student loan applications it is also essential that you understand if your parents have any RESP income for you. That money will be taxed in your hands and affect your ability to get a student loan so it is important you plan the withdrawal rate to your optimal benefit as you go through school. It doesn’t make much sense to squirrel away half of the RESP money for your last year, only to have to pay taxes on a portion of it that could have been avoided with a little planning.
Save Drama for First Year Arts Students
Avoid the late night tearful phone call asking for $1000 to pay down an outstanding credit card balance. Have “The Money Talk” before it gets to that point. Parents, if you’re listening I’m not saying I know how to teach children about money because I honestly have no children of my own, but I think communicating about what is expected and even just allowing them to understand some basic financial realities is a great first step. By keeping the subject taboo all you are really doing is crippling their learning curve. Some parents decided that they don’t want to allow their children to borrow their car, or they want them to pay a little rent. These “tough love” strategies have worked just fine for many people, all I’m saying is to make sure that both sides know what is expected so that they can plan for it and there are no unnecessary hard feelings.