Thanksgiving is just days away, which for many means family dinner, maybe a walk in the woods, and students nationwide returning home from their university and college campuses for the long weekend. The beginning of the school year can often lead to unexpected expenses, which makes this weekend the perfect time for students to sit down with their parents and check in on their budgets. Talking about money can be tough, especially when there are holiday distractions. To help get the conversation going, the Financial Post’s Robert Liwanag outlines some starting points for students and parents.
Students: How do I ask for more money?
Before approaching their parents, students should outline their unexpected expenses (real or potential), says Mandy Mail, director of student banking at RBC, adding that they should also come up with a list of solutions they plan to use to cut down on costs. Unplanned expenses might include computer repairs, exceeding phone call limits, higher than expected textbook costs or high food costs.
“Really think through why you need more money and make sure you’ve established a good reasoning for your request, so your parents can understand that need and quantify it better,” Mail says. “As a student, it’s good to be proactive, and it would let your parents know that you’re becoming financially mature.”
Sometimes that financial maturity needs to be hard-won. For students who exceeded their budgets as a result of irresponsible spending habits – shopping, eating out too many times a week or excessive partying, to name a few — approaching their parents with budget woes can be double difficult. If a student doesn’t have enough money to make it to Christmas, Mail suggests they bring up the idea of a repayment plan to their parents.
“Every parent would appreciate their child saying, ‘I’ll be working this summer so I can pay you back later on,’ ” Mail says. “Even if a parent won’t accept a repayment plan from their child, it certainly helps to hear that.”
Parents: How do we check in on finances without being smothering?
In an ideal scenario, before students leave for school parents should ensure an open line of communication is in place that allows them and their children to have comfortable financial conversations, says Al Antle, executive director of Credit Counselling Services of Newfoundland and Labrador.
However, that is sometimes easier said than done. For students living away from home and handling their own finances for the first time, it might be difficult to tell their parents if they run into trouble. If that’s the case it’s fine for parents to make the first move, Antle says, recalling an incident in which his daughter traveled to Europe on a fixed budget and exceeded it by about 60 per cent.
“It’s tough to be the bank of mom and dad and not feel a little paternalistic, but this comes back to the kind of relationship we need to have with our kids anyway,” said Antle. “At the end of the day, nobody will be able to fully predict how much the semester will cost, so it’s important to be able to ask those questions often.”
Asking your child if the budget you planned in the summer is proving realistic is a good place to start, and offers them the opportunity to talk about their spending patterns. That conversation may lead to finding savings in some areas as well as over-spending in others.
How to reassess a budget
Parents can’t cave in to all of their children’s financial requests, but they can’t simply decline them all either, Mail says.
“Six weeks into the school year is a great time to stop and look at where you are financially,” she said. “The number one question for students and parents is whether your sources of income are going to cover your expenses, and then work from there.”
When reassessing a budget, she says it’s important to first figure out all the available solutions to cut back on expenses. Even small things such as taking advantage of student discounts, switching to unlimited texting plans or withdrawing money from your own bank instead of the on-campus ATM to avoid unwanted transaction fees can provide savings make a big difference over the long term.
What if parents have no more money to offer?
When reorganizing your budget, prioritizing expenses and looking for other financial opportunities is key.
Students should first focus on sources of income that they don’t need to pay back, Mail says, suggesting a part-time job or scholarships and bursaries — on-campus jobs are often flexible and understanding of class schedules, and although many bursaries are awarded before classes start, some are given out between semesters.
If there’s still a gap between income and expenses, establishing a student line of credit is an option, Mail says, adding that it should be the last resort.
“Parents should help their kids understand what credit is and to be careful with it,” she says. “Buying things online, establishing a good credit rating and getting rewards points are all great, but a credit card shouldn’t be used to spend beyond your means.”
By Robert Liwanag
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
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