It’s getting to that time of year. We’re bombarded with back-to-school ads, sales on notebooks and pens and it’s time to pencil in a date to go shopping for dorm room essentials. But having a stocked pencil case and new Ikea organizers for a tiny space doesn’t indicate total preparedness for the upcoming academic year. Parents and students should devise an updated budget plan before Labour Day rolls around.
The reason? You may not be as up to speed as you think. A just-released RBC study, conducted by Ipsos Reid, found that more than half of students (55%) have hidden from their parents how much they spend. This compares to only 33% of parents who believed their child to have concealed spending.
The study was conducted in June through an online survey of 1,180 students aged 17 to 24 and 971 parents of students studying in post-secondary.
To go forward with the budgeting plan, determine the total debt load. Nine-out-of-10 parents say they know how much debt their child has, but only 78% of students agree with this. And if you think you’ve been setting an excellent example of how to manage money, you may be wrong yet again. The study reported that 89% of parents think they have done well as financial role models but only 80% of students think that this is accurate.
Students going back to school are carrying more burdens than just their student loan. First day jitters, schedules packed with late-night study sessions, assignment deadlines and planning for the future are among common stresses for young academics. Money-related anxiety is often added to that list but it may not have to be if families are in constant communication about the budget. The study found that 71% of students are worried about having enough money to cover all their costs. Many parents were not all aware of this—only 57% believed that finances were a cause for worry for their child.
When sitting down to have the talk, make sure it’s a thorough one. Two-thirds of students say they are confident with how they are managing their money, but most of them (87%) still think that they have a lot yet to learn.
To alleviate the stresses of the student budget, make sure to revisit the budget and take into consideration applicable scholarships and student discounts. Already facing massive debt? A strict plan and significant lifestyle changes can lead to finally becoming student debt-free.
Here are RBC’s 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?