Do you have a child heading off to college or university in September? It’s a time of life when everything is new and challenging, and for most students that includes managing their own money. You may want to alert them to a couple of key danger areas – spending more than they can afford and abusing credit cards.
The best way for a student to begin to control spending is by keeping a budget. If you can get that message across, you will have given your child the best possible tool for her or his financial education.
As a simple budget exercise, students should:
Tracking spending makes it easier to separate fixed and necessary expenses, like text books or a meal plan, from discretionary items, like fast food and pub nights. With this financial record, students can ask: “Where am I spending more than I can afford?”
Budgeting helps students distinguish between things they need and things they want. They can learn to think before they spend and, over time, see their new spending habits positively reflected in their monthly tallies.
In the credit world, students are unique. Who else can have no income, yet still qualify for a credit card? Here are the top three credit-card mismanagement mistakes made by students:
As a parent, what can you do? Let your child know about the consequences of abusing a credit card. Students need to understand that using a credit card may not feel like they’re spending real money, but they are. In fact, they’re spending more than they may be expecting if they also pay the high interest rate on an unpaid balance.
Try suggesting to your child to keep an ongoing list of credit card purchases. Tracking purchases may help to control spending and avoid a nasty surprise on the monthly bill. Maybe your child will go for the idea of only using his or her credit card when really needed – for emergencies or to make online purchases of necessary items, such as textbooks. Encouraging your child to start of with a low credit limit is another way to help avoid unnecessary spending.
Managing money is a learning process. Don’t be surprised if your child needs your help to cover a $100 phone bill. Try to make it clear, however, that you expect it not to happen again.
In the end, it’s all worth it. If you get your child started on the right track, you can instill good habits that will last a lifetime.
After years of Registered Education Savings Plan (RESP) contributions, Canada Education Savings Grant (CESG) deposits and plan growth, the day arrives to take money out. How do you go about it? Here’s what you need to know about the rules surrounding RESP withdrawals.
There are two kinds of RESP withdrawals:
If your child will be attending university or college in the near future, talk to us. We’ll help you determine what to withdraw and when, and make any necessary adjustments to the investments in the plan.