Canadian post-secondary students in colleges and universities who fund three-quarters or more of their post-secondary costs on their own tend to develop better financial skills than their peers, according to a recent survey conducted on behalf of Toronto-based Royal Bank of Canada (RBC).
Specifically, the RBC study reports that half of Canadian students who received less than one-quarter of their funding from their parents said they feel confident in their financial decision-making skills. In contrast, only 41% of students who receive 25% or more in funding from their parents said they shared that same confidence.
Likewise, 42% of students who fund at least 75% of their own education said they can create and adhere to a budget whereas 33% of students who receive financial support of 25% or more from their parents said the same.
The survey found that the majority of Canadian students are, in fact, responsible for funding a large part of their education as 64% receive less than one-quarter from their parents in funding. This means that only 36% of students are receiving financial support of 25% or more from their parents.
Students are coming up with tuition by pooling money from a variety of sources, such as summer employment (61%); scholarships, bursaries and grants (53%); and continued part-time working during post-secondary school (47%). The report did not say how many students are relying on financial loans.
"What better time to plan for financial wellness and awareness than at a time when students are gaining independence and new experiences?" says Laura Plant, director of student banking with RBC, in a statement.
"But we know there is still work to be done in helping students graduate with the confidence, knowledge and skills they need to succeed, and it goes far beyond what they're learning in the classroom," she adds.
For example, students who receive significant funding for post-secondary are twice as likely to rely on financial help from their parents after graduation than their peers who received 25% or less of financial support from their parents.
"While contributing financially to your child's education is a wonderful gift, being clear on expectations from both parties is really important," Plant says. "Make sure you discuss the ‘terms,' including when financial support will end."
Financial advisors can play a vital role in preparing clients and their children for post-secondary education by bringing up tuitions costs early on. RBC offers the following discussion points for families:
> Have the "talk"
Bring up post-secondary costs while children are still young so they can develop budgeting and money management skills long before they start applying to schools.
> Start saving early
For parents who plan on contributing money toward their children's post-secondary education, RBC's advice is to "save early and often." One way to begin is by opening a registered education savings plan.
> Set expectations
If parents want to provide financial support, they should be clear as to how much they will be contributing. This way, children know how much money they need to come up with on their own.
Toronto-based research company Maru/Matchbox conducted the survey on behalf of RBC in July among a representative sample of 1,011 Canadian students enrolled in a Canadian university or college.
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