Thursday, 22 September 2016

Post-secondary Education: To Pay or Not to Pay Your Children’s Education Costs - What’s on Your Mind? September 2016 Edition

This is the time of year that cheques are being written for tuition, books, possibly housing and other expenses for your children to go off to university or college.  Have you ever questioned what your financial obligations to your children are?  Do your children assume or expect that they are entitled to financial help from you or are they considering student loans?

With the rising cost of education, a lot of people are not totally prepared when their babies are now old enough to enter post-secondary school.  The emotional roller coaster is bad enough but now you struggle with how much financial support to give your child.
The school has been selected so you already know whether you are adding housing on top of the tuition and books.  Do you get your child to pay for a portion or do you pay the whole thing?  Does the education funding from you come with strings attached?  For instance, does the child need to get certain grades for you to continue paying?  If there is no skin in the game for the child, what is the motivation to do well?  Will your child pay for their own personal discretionary expenses or are you funding everything?  Do you expect your child to work part time or concentrate solely on their studies?

Will you fund the first degree or continue until the child decides they are finished or tired of school?  Should you take money from your retirement savings if you are paying?  Will you ask the child to pay back the money when they start earning a living or will you work longer?
There is no correct answer.  Each situation has to be looked at individually.  But if you were to pay your child’s education, make sure you plan well in advance and have a very detailed conversation with your child of what your expectations are.  One of the greatest gifts you can give your child is an education where they can make their own way in life.

If your child is responsible and you can afford it, paying the fixed education costs would help the child focus on getting good grades and know that they can get a good start without debt when schooling is completed.  Teaching your child how to budget for the discretionary costs, cell phones, personal items, entertainment, etc., will be a secondary education your child will benefit from when they live on their own.

Talk to your financial advisor for more information on your personal situation and what path you should consider for your child.

Linda J. Levesque, CFP®, FMA, FCSI
Sr. Investment Advisor
Director, Private Client Group
HollisWealth Insurance Advisor
HollisWealth Insurance Agency Ltd.
Levesque Wealth Planning
HollisWealth, a division of Scotia Capital Inc.

This article was prepared solely by Linda J. Levesque who is a registered representative of HollisWealth® (a division of Scotia Capital Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada).  The views and opinions, including any recommendations, expressed in this article are those of Linda J. Levesque only and not those of HollisWealth®.  Levesque Wealth Planning is a personal trade name of Linda J. Levesque.
   ® Registered trademark of The Bank of Nova Scotia, used under license.
  HollisWealth is a trade name of HollisWealth Insurance Agency Ltd.
Insurance products are provided through HollisWealth Insurance Agency Ltd.  

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