Back-to-school budgeting and financial planning for the academic year ahead
Fall can be an exciting time – it’s typically when kids go off to university to start a new school year. With the price of post-secondary education continuing to rise, families should consider developing strategies not only to support their children but to also show them how to manage their own budgets. Here are a few things to think about before the next semester starts.
Long-term financial planning
Helping your kids build their financial awareness can go a long way.
Start investing – If your kids are still young, now might be a good time to open a Registered Education Savings Plan (RESP), if you haven’t done so already. Take this opportunity to educate them on the benefits of compound interest and the importance of investing early, even in small amounts.
Fidelity has a video series called Money Gains, designed to teach young people about investing, and are a great place to start educating the next generation of money smart Canadians.
Build an emergency fund – Adding an emergency fund to your monthly expenses will help ensure your family is ready for any unexpected expenses that come your way. You can create a personalized savings plan that considers financial situations with Fidelity Canada’s savings calculator.
Take advantage of scholarships and grants – Your kids may qualify for financial assistance in the form of scholarships, grants or bursaries. Start by contacting your child’s school to see what types of assistance are available and whether they qualify. If you know where to look, there are also thousands of other scholarships and assistance programs available. Services like Scholarships Canada can help you find a range of scholarships you can apply for.
Create a comprehensive budget.
Helping your kids can be rewarding, but it feels even better when you know you’ve taught them how to take care of themselves. Sit down together to go over all the potential costs and develop a plan to help cover those expenses. There is a lot more to the cost of school than tuition. Here are a few of the main expenses to budget for.
Tuition and fees – The price of tuition and associated expenses can vary greatly depending on the age of your children and the college or university they’ll be attending. Make sure you have up-to-date figures for the coming year and a rough idea of what it will cost to complete the entire program.
Books and supplies – Look at this year’s curriculum to get an approximate idea of how much money you’ll need for books and other essential items, and try to buy used copies if you’re able.
Living expenses – If your children will be going away to school, be sure to account for any additional expenses they’ll be required to pay, such as rent, food (if they don’t have a meal plan) and transportation.
Regular review and adjustment
An effective budget isn’t something you set and forget, it’s an evolving plan that requires regular attention.
Monthly check-ins – Working with your kids to revisit the budget every month will help you track whether they’re on plan; it will also give you the chance to work together to identify new ways to save money.
Adjust for changes – Unexpected expenses are a part of life. Keeping your budget flexible will help you cover whatever life throws at you.
Prioritize essential vs. non-essential – Prioritize essentials your kids can’t afford to live without, such as food and shelter. For non-essentials such as entertainment and travel, this is a good opportunity to teach them about the importance of setting financial goals for the future.
Implement cost-saving strategies.
Once you have a good idea of how much it will cost to send your kids to school, and have a plan to cover those costs, start searching for ways to have those non-essential items.
Buy used or digital textbooks – You may find used or digital versions of the books your kids need at a discount. If they have no choice but to buy new editions, they may be able to recoup some cash by selling them when the year is done.
Campus resources – Depending on the school, your kids may have access to a wide range of services and entertainment, such as libraries, gyms and campus events – some of which may already be included in your child’s tuition and student fees.
Watch where you eat – Buying food on campus can be convenient, but it can also add up. Preparing meals at home is an easy way for your kids to lower their expenses (and learn a life skill).
Getting around – Whether your kids are travelling to another city or living at home, they’ll need a way to get from place A to B. Using public transportation or carpooling can cut down on transportation costs. Cycling to school can be another healthy option for your budget.
Going off to college or university can be a launching pad for a child’s career, but the lessons that happen outside the classroom can be just as important to their long-term success. Helping your child understand how to manage their finances through school is a skill that will last a lifetime.
