Last week we reviewed some of the benefits of helping your child pay for their education, but today well examine some of the disadvantages of paying for their school. Or should we call it their party fund?
Your Financial Position
In much the same way airlines tell you to put on your oxygen mask before helping others, you should have your finances in order before helping your children with their education costs. As much as you would like to give them the option to avoid debt altogether if you’re taking out a loan for their schooling how will it affect your finances? What type of impact will the debt have on your goals such as retirement? Is the tradeoff of paying for your child’s school worth extending your working career? That’s time you could be spending on the golf course rather than in rush hour traffic. Your child will have student loans at their disposal, but who’ll be giving you a loan to fund your retirement? If it isn’t in your means to help them with the cost of education, then your decision should already be made.
Responsibility and Work Ethic
If your child decides to attend university without your financial support, they’ve already taken the first step towards taking responsibility for their education. They know the value of education as they wouldn’t be spending thousands of dollars to attend university for no reason. I don’t have any statistics to back up my next point, but I’ll go out on a limb and say that a child who paid for their education will have a good work ethic when it comes to succeeding in school. After all, they are investing in their education, whereas some children are there simply because their parents forced them to attend. Being forced to work a part-time job to pay for school instills a strong work ethic. It also forces your child to learn how to juggle their time efficiently as there are only so many hours available in a day.
Learning the value of money
Having to stretch every dollar to last as long as possible is a great way to learn the value of money. Allowing your child to learn this before they start earning a real income can save them thousands of future wasted dollars. I’m also willing to wager the course drop rate is a lot lower amongst those who are paying for their education. It can hurt your ego to have to pay for the same course twice.
Stay tuned for the final part of this series where I’ll share my thoughts on the balance between helping and not helping your children pay for school.
Marc Sabourin is a Winnipeg based Financial Advisor and Retirement Specialist with Harbourfront Wealth Management. His focus is on helping pensioned employees achieve their retirement goals. He draws on his real-life experiences to explain strategies that are often presented as intricate. He believes financial literacy is an integral part of one’s financial well-being and his goal is to make learning about these topics fun and enjoyable.