By Aaron Hector, Private Wealth Advisor, CWB Wealth
Special to Financial Independence Hub
Back-to-school season can raise tough conversations about financial responsibility. For many, it causes students and families to re-evaluate both short and long-term goals in the pursuit of a post-secondary education.
The good news is that creating a plan to manage school expenses doesn’t have to be difficult: it just requires students and families to look ahead and be realistic with budget, goals and expectations. In other words, this isn’t a process to “wing it.” Using a scenario in which you have a student enrolled or planning to enrol in a post-secondary program, here are five tips that will can help keep your finances on track this year.
Work smarter, not harder: Develop your school savings plan
It’s never too early to start saving for your child’s education. If you are a first-time education saver and starting to put money away, be sure to learn about opportunities that fit your needs and goals: whether that is saving smaller amounts over longer periods of time or leveraging options like a Tax-Free Savings Account (TFSA) or a Registered education savings plan (RESP).
For example, all new parents should start a RESP, which is a tax-sheltered investment vehicle that provides access to government grants which provide a 20% match on your contributions (up to certain limits). The first step is to speak to your advisor to learn about your options. The options are vast and more flexible than most people assume!
Leverage your resources: find out how your bank and school can help you save
To ease the burden of pricey tuition, it pays to do a bit of research on the programs, grants, or scholarships you or your child might be eligible for through your financial and post-secondary institution. The resources are out there, but it can be tough to know all that exists or how to apply for them. A good advisor can help with this part – in fact, you should be able to count on their help and resourcefulness for your entire financial journey.
Do your homework: Build a budget
Between school supplies, courses, commuting and school fees, a back-to-school shopping list can feel daunting, endless and expensive. Find savings by teaming up with your kids to identify which costs are needs versus luxuries, and then prioritize or cut as need be. Use what you’ve spent in previous years as a baseline to create a budget for the current year, adjusting for any new or increased costs you expect to come up. Because budgets can be quickly impacted for unexpected costs, consider a back-up fund. Tracking your spending, spreading out purchases, buying in bulk, reusing items and investing in supplies that are quality (not just trendy) will help you properly manage that budget for years to come.
It’s your (financial) responsibility: Manage your money with the proper mindset
For many, there are at least two life pivotal transitions that take place after graduating high school: entering the world of post-secondary education, and (more importantly) taking on a more mature financial mindset. This is a great time to encourage kids to open their own TFSA, or even a First Home Savings Account (FHSA). While the TFSA can be used for shorter term financial goals, the FHSA should really only be used for money that is being set aside for a housing purchase within the next 15 years. Encouraging your children to form good financial habits today will prove to be very powerful over the long term.
Knock. Knock: Don’t forget to check in
You’re already likely to keep tabs on your children throughout the year to make sure they are staying on top of their laundry and homework, but some parents might forget to check-in with their own financial advisor. Meeting regularly with your advisor helps to:
- Manage budget changes in real-time as your family’s expenses and priorities shift
- Keep your finances on track by reviewing whether you are staying on target you’re your financial goals
The cost to attend a post-secondary institution can be massive, and the price tag can become even harder to cover without the right plan. So start early. Save for the long-term. And lean on the advice and tools that only a good financial advisor can provide. You – and your future student – will be thankful for being proactive.
To learn more about setting you and your kids up for financial success visit www.cwbwealth.com
Aaron Hector is a Private Wealth Advisor with CWB Wealth where he has been for the past 16 years. In his position he works with clients in a financial planning capacity. The majority of his clients are of an ongoing long-term nature, but he also prepares financial plans on a fee for service basis for those who are more interested in a one-time financial planning engagement. He is the Symposium Chair and board member for the Institute of Advanced Financial Planners (IAFP) and a member of the Financial Planning Association of Canada (FPAC).