If past practice is any indication, the majority of post-secondary school students will likely run out of money before the school year ends – and end up turning to the “Bank of Mom and Dad” for help.
A new poll from CIBC has found that 51 per cent of post-secondary students tapped their parents for additional financial support last year because they ran out of money.
Regina-based financial blogger Tim Stobbs is not surprised by the numbers.
“Even my budgeting skills weren’t that good when I left high school and started university.”
He said a lot of young adults will overspend their budgets because this is typically their first crack at finances in the real world.
Today the 37-year-old father of two is on track to retire in three years. The engineer’s motto is “Don’t spend money on things you don’t care about.” That’s helped him pay off his mortgage and put away 65 per cent of his income.
“Don’t spend money on things you don’t care about.” – Tim Stobbs
“If you can walk out (of university) with less debt, you’re way further ahead in your life. Anything you can do to minimize that in the upfront is probably a great idea.”
His advice for first year students is to add at least 10 to 20 per cent to what you think your costs are going to be, because there will always be extra fees and expenses that are hard to predict.
For parents, he suggests requiring their kids to turn in a detailed budget of where the money is going.
“It’s okay to help out your kids and it’s a natural want to do that, but you do have to have some degree of accountability.”
According to CIBC, some 48 per cent of students from families with household incomes of more than $125,000 tapped their parents for extra cash, compared with 52 per cent from families with household incomes of less than $75,000.
The online survey was conducted Aug. 13-17 among 1,001 Canadian parents who are Angus Reid Forum panelists.
– with files from The Canadian Press