I was shocked this week when I read about the recent survey[i], 3-4 Parents Find It Harder To Save For Their Child’s Future[ii], by Embark Student Corp. The survey has revealed that a majority of Canadian parents are anxious about financing their children’s university education but remain committed to making sacrifices to support their kids’ academic pursuits.
Over half of parents dreaded the prospect of paying for university, with many willing to delay retirement or take on debt to cover costs. Say what??? This dedication stems from the belief that higher education is essential for success. Stop the bus right there, please. I get that, but I also believe we should be helping our kids become financially independent. I certainly don’t understand why a grown-ass parent would put their own financial future in jeopardy and lay it all out on a silver plate for their kid. Where are the life lessons here for your kids? Let’s get into it and then you can make your own grown-ass decisions.
The financial strain is huge these days, and the survey discusses that many parents are already cutting back on necessities or considering going into debt to pay for their child’s education. 🤯
The average annual cost of undergraduate education in Canada is around $30,000, with tuition fees varying based on the program and school and costs varying depending on where they live while going to school. Rising inflation and interest rates are further exacerbating the challenge of saving for education. Despite these issues, the survey has shown that most parents are still prioritizing their children’s education over their own financial well-being.
Student debt is a major concern, with nearly half of students graduating with an average debt of $25,000. Despite the financial burdens, parents recognize the importance of post-secondary education in securing their children’s future. I truly understand that, I do. We want to give them every opportunity to be successful. Embark CEO Andrew Lo highlighted the significance of higher education in today’s uncertain job market and economic conditions.
But hold on a second, there are many voices out there that also tell us that our kids will be employed in jobs that don’t even exist yet, so how do they even know what they’re supposed to be studying? And is traditional education the path they need to be successful in that job that doesn’t exist yet? As Apple Fostering wrote in their LinkedIn article Careers of the Future: 65% of Young People Will Be Employed In Jobs That Don’t Yet Exist[iii], “education systems around the world must adapt accordingly—teaching students skills that go beyond a specific set of knowledge or technical training.” So, and please bear with me here, are folks robbing their own retirements to pay for education that may not even be relevant in the four years it generally takes to get an undergraduate degree?
I’ll leave that thought planted in your head while I skip on back to my main point and that is, why are parents robbing their own retirements to pay for their kids’ education? Come on people! Saving for your own retirement is not only beneficial for your own financial security, but also indirectly benefits our kids, in a few different ways.
First, is financial independence. By saving for your retirement, you’re ensuring that you won’t need to rely on your children for financial support later in life. This frees up their resources to focus on their own education, career, and financial goals. It also teaches the kids how to be financially independent. And let’s face it, if they’re the ones paying for the tuition, they’re going to be more vested in what they’re learning. In the end, when they cross that stage and fling their cap into the air, they’ve got a very strong sense of accomplishment and financial independence. And rightly so. And you can weep into your hanky in the audience with pride and the comfort of knowing you haven’t jeopardised your retirement and don’t have to continue working till you’re 89.
Secondly, the financial burden is a real chain around the neck. Think about Jacob Marley in A Christmas Carol, hauling those physical manifestations of regret around. If you have sufficient retirement savings, you’ll be less likely to require financial assistance from your children as you age. This allows them to focus on their own financial responsibilities without the added stress of supporting you financially. It’s a win-win for you both.
Next, we have role modelling. Saving for retirement sets a positive example for your kids. They learn the importance of financial planning, responsible spending, and long-term goal setting by observing your habits. You never know, they might even start asking you questions, and you can help them focus on their goals and their budgeting.
Another positive is that by giving yourself longer to save and invest, you’ll have more money down the line that you can help them with in other ways. For example, you might be able to help them out with a down payment on a 10’x15′ condo that will cost them $1M—that’s the current going rate I think. 😉
The last benefit that springs to mind is legacy planning. By securing your own financial future, you may have the opportunity to leave an inheritance or financial legacy for your children. This can provide them with a financial cushion or help them achieve their own goals in the future…at a time when they might actually appreciate it!
I’m paying for my kid’s first two years of post-secondary, that’s all I managed to save after my rocky start, after that, she’s on her own. And I don’t feel bad about that. I’ll help her in other ways, such as living rent free at home, or if she needs a new computer, etc. I feel that saving for my retirement is one of the best things I can do for myself and for her.
Rant over.
[i] The survey, conducted by Leger and Embark, polled 1,000 parents between Feb. 21 and March 4, 2024
[ii] https://www.embark.ca/learning-centre/parent-saving-poll
[iii] https://www.linkedin.com/pulse/careers-future-65-young-people-employed-jobs-dont-yet-/
