Bookbags and Budgets: Back to School Tips for Parents and Students

A new school year is on the horizon, and it’s not just kids who are facing math problems. Canadian parents are trying to navigate today’s higher cost of living, while still putting money aside for their children’s postsecondary education. Tuition at a Canadian university, college or trade school is higher than ever before: between $2,500 and $11,400 a year, depending on the school and program.

Doing some financial planning now can help ensure your child will be able to proudly walk across a graduation stage in a cap and gown. Involving them in the process will give them a deeper appreciation for the opportunity to attend postsecondary school and set them up to manage their own finances as independent young adults. 

Here are four tips for parents and students. 

Encourage financial literacy  

Starting conversations about money with your children early on can help them to build an understanding of finances and make the subject less daunting for both of you. The start of a new school year is a natural opportunity to begin or continue these conversations. And if you haven’t started talking to your kids about financial planning, you’re not behind; it’s never too late to start the conversation.

When you cruise the aisles together during your back-to-school shopping trips, try integrating money into casual conversations, like pointing out why some products cost more or less than others, and asking them to imagine the reasons why. Set a budget for a desired purchase, like a new backpack, and invite them to find one they like within that range. When money and budgets are introduced early on, in a low-pressure situation, they seem manageable, rather than something to be feared.

If your child has earned any money over the summer, like from a garage sale or mowing a neighbour’s lawn, take them to a bank to open their first savings account—it’s an exciting milestone they can take pride in.  

Grow your money  

Back-to-school season is a good reminder to make the time to open a Registered Education Savings Plan (RESP) for your child if they don’t already have one. Parents (and other loved ones) can open an RESP at no cost as soon as a child is born, provided they have a Social Insurance Number (SIN) for the child . This tax-sheltered plan can help you save for postsecondary education over time, with direct assistance from the federal government: the Canada Education Savings Grant (CESG) matches your contribution by 20 per cent, up to $2,500 a year.

You can open an RESP online or at a branch, and an advisor can help you understand the best investment options for your needs. They can also set up a pre-authorized contribution, so you add a little money each month without even thinking about it and maximize the government’s matching funds. The child will have access to RESP savings once they’re enrolled in a postsecondary school. 

Canadian residents with a Social Insurance Number (SIN) who have reached the age of majority – either 18 or 19, depending on the province – can also open a Tax-Free Savings Account (TFSA). This complementary savings tool may be of interest to both parents and students. Your money grows tax-free in a TFSA and can be withdrawn at any time without penalty, making it appealing for anyone who might be considering how to fund a gap year. 

Shop smart  

Families can set a good precedent by sitting down together every fall to make a back-to-school shopping list. Creating a detailed list of what you need in advance— supplies, clothes etc.—can help to avoid impulse purchases while taking stock of what you already have helps to stay away from excess buying. If you’re part of a loyalty program, it may be worthwhile to see if there are any relevant offers that might provide some useful perks.

Parents may also consider drafting a budget for the whole school year, to capture the full breadth of upcoming expenses—things like pizza days, class trips, extracurricular activities and birthday parties. You and your child can also track your spending to see how your expenses add up and to help you stay within your designated budget. 

By the time your child is getting ready for college, university or trade school, they’ll be ready to tackle a much more complex version of their school budget. 

Do your research  

This September, and throughout the school year, both parents and students have an important role to play in managing the financial costs of education and planning for postsecondary school.

Students should understand the true cost of schooling, and you or your child might want to start thinking about funding postsecondary options. Your child should begin to research schools and programs that interest them, scholarships they might be eligible for and the availability of loans (if needed). They should also look into the off-campus housing markets in different cities—how easy or difficult will it be to find an affordable place to live? 

It’s important to be honest with kids about what you can afford, the role of student loans, and how costs will be split between yourself and your child. As they are preparing for school, big questions to ask your child include: 

• Will you be living at home or away during the school year? How about over the summer? 

• Will you work part-time during the school year or over school breaks? 

• Do you want to consider taking a gap year to have new experiences or to make money?  

If you have specific questions about how to set your child up for postsecondary success, or how to budget for an upcoming move to a postsecondary school, an advisor can help guide you.

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