Why less financial support could mean more

Having more ‘skin in the game’ could help investors learn valuable life lessons

Why less financial support could mean more
Being a parent is a balancing act. During the formative years, parents provide valuable support in their children’s development. But as the children get older, there comes a point when they need less hand-holding and more independence. And it’s the same when it comes to financial support.

According to a new poll by Royal Bank of Canada, post-secondary students who receive less than 25% of their funding from parents feel more confident in making financial decisions compared to those who get more financial support. Those whose parents fund less than one-quarter of their expenses are also more likely to come up with and stick to a budget.

“The post-secondary years are an exciting time for young people as they face big life transitions and a number of important decisions,” said Laura Plant, director of student banking. “What better time to plan for financial wellness and awareness than at a time when students are gaining independence and new experiences?”

Among the students polled, 64% receive less than one-quarter of their school funding needs from their parents. The alternative sources of funding include summer employment (61% of students polled); scholarships, bursaries, and grants (53%); and part-time work that continues during the year (47%).

The degree to which students get support from their parents also has an impact on their spending priorities. For students who rely less on their parents, the biggest budget line items are gas and parking (31%); cellphone and data charges (28%); and utilities (21%). As for their peers, the largest expense items are social outings and entertainment (30%); clothing and shoes (23%), and cellphone and data charges (22%).

The RBC study also suggested that students whose parents chip in more are twice as likely as their peers (21% compared to 11%) to expect parental assistance after they graduate.

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