How to Ensure Your Kids Won't Move Back Home After University

So your child is off to university, eager to make his or her mark in the world. After he or she finishes that degree, are they going to move back home? Is there any way you can prevent them from coming back home thanks to their newly-acquired debt load?

A recent survey by TD Canada Trust found that the average cost of a four-year undergraduate degree is $27,747 and while living away from home it jumps to $84,000. They also found that 88 per cent of parents expect their kids to help pay for school and 80 per cent of parents do not expect to have enough money to pay for all of their child's education. You can see more with this cool infographic.

So let's talk about practical tips that can be used to ensure that your child doesn't graduate with the maximum amount of debt.

SLIDESHOW: HELP YOUR KIDS GRADUATE WITHOUT DEBT

Give Your Grads Money Smarts

1. Start an RESP

If you have young children, start a Registered Education Savings Plan. It's easy - just apply for a Social Insurance Number for your child and choose an RESP provider. Some parents use their monthly child allowance into the RESP as you can save up to $50,000 for your child's education. The RESP allows the saving to grow tax-free until the child goes to school.

2. Apply for Grants and Bursaries

The best kind of money is the free kind that you don't have to pay back. Consider helping your child apply for bursaries through their university or college. Some of them may only be $100 but that money could cover the cost of a text book and didn't come out of your pocket.

3. Encourage a Part-Time Job

You might want your child to focus on their studies but a part-time job will help prevent them from graduating with maximum debt. It will also gives them money so they can have a drink or order a pizza.

4. Encourage Them to Start a Saving Account

This applies before, during and after school. If they're working part-time, encourage them to save their money in a Tax-Free Savings Account. The money will accrue, tax-free and can be used for school to minimize their debt-load or can be used to pay down their loans when they graduate.

5. Instill Good Habits

Don't just send your children off to school with a credit card. Sit down with them (and with a financial advisor if you're uncertain about how credit works) and talk to them about it. If you share the credit card, don't just let them spend indiscriminately. Rein them in if their spending is out of control. Your child will probably hate you for it but they'll be grateful when they graduate and realize they have to pay off loans and have to have good credit to rent their first home or buy their first car.

This also applies to developing a budget. Help your child develop a realistic budget so they have a handle on their money and aren't calling you in February for more money.

If you are paying for your child's education, consider putting them on an allowance. Yes, it's old-school but instead of just depositing a lump sum into your child's account, only deposit their monthly allowance which would include everything in their budget. This means you and your child have to keep track of funds. Your child will also have to live within their budget and learn how to make money stretch.

6. Take Them Shopping

No, not for clothes but grocery shopping. If you're an expert couponer or like to shop for the best deals, take your child with you so they can learn these skills. Bargain shopping means saving money which means less reliance on credit.


7. Help Them Pay Off Their Debt

Not by giving them money but by offering to sit with them to plan out a debt repayment schedule. This might include offering to pay for a session with a financial planner.