Canadian parents are ahead of their counterparts in other Western nations in saving for their children’s post-secondary education, but many are not making use of savings plans targeted for this purpose and have concerns as to how their children’s education costs will affect their other financial commitments, according to a global study Vancouver-based HSBC Bank Canada released on Wednesday.
Close to three-quarters (72%) of Canadian parents are saving for their children’s post-secondary education, putting them ahead of parents in the U.S. (65%), Australia (53%) and the U.K. (46%), according to The value of education: foundations for the future report, which includes responses from parents in 15 countries and territories.
However, only 30% of Canadian parents are funding their children’s university or college education through a savings plan specifically for education. Almost one-quarter (22%) are taking that funding from general savings, investments or insurance policies and 66% are using their day-to-day income to get their kids through school.
Many Canadian parents are also concerned about how their children’s educational costs will affect their own finances, with 43% worrying about the cost and 31% concerned about how paying that expense will affect their other financial commitments.
“Despite the fact they are some of the most likely to say they have saved for their child’s education, Canadian parents are particularly concerned about how educational costs will affect their household’s financial well being,” says Betty Miao, executive vice president and head of retail banking and wealth management with HSBC Bank Canada, in a statement.
“By having a financial plan to meet their family’s overall needs and reviewing it regularly, parents will be better placed to support their children’s studies without compromising on their own long-term financial goals,” she adds.
If their financial situation becomes difficult, many parents’ long-term savings and retirement plans may be in jeopardy. Exactly half of Canadian parents believe funding their children’s schooling is more important than contributing to long-term savings and investments and 43% state that they prioritize their children’s post-secondary educational expenses over saving for retirement. More than half (54%) said they would be willing to go into debt in order to afford university or college expenses.
Financial advisors should also note that many Canadian parents are thinking about these expenses early in their children’s lives as 28% of parents start planning ways to fund these expenses when the child is born; 9% before the child is born; and 24% look at these issues before their child begins primary school.
Even so, half of Canadian parents expect their child to contribute financially toward those educational expenses and 39% say their university-aged children are helping to fund their own education, which is one of the largest proportions of all of the markets surveyed, the study notes.
Parents were also asked for their thoughts on the milestones that would help their children become more financially independent and a critical one to 62% of parents is “seeking financial advice from professional advisors.” The two most popular answers were “managing their bills” and “getting a full-time job” with 90% of Canadian parents saying each milestone was important while the least popular answer (30%) was “taking trips/holidays abroad with their friends.”
Ipsos MORI mainly conducted the research online for HSBC in February and March. The survey includes the responses of 6,241 parents with at least one child aged 23 or younger either in post-secondary school or close to attending post-secondary school. Parents from Canada, Australia, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, United Arab Emirates, the U.K. and the U.S. were surveyed.
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