19/06/18The next generation: How much help should you give to children at uni?
Could you let your child struggle financially and fend for themselves, or is it your responsibility to make sure they are totally comfortable when they eventually enter the adult world?
Potentially, you might think that neither of these is the right choice for you, and that a fairer, middle ground exists. But, whatever your attitude toward helping your children get a head start in life, it is often prudent to have some money put aside in case your child has difficulties transitioning into a financially independent adult when the time comes.
What your child might need help with
As much as some of the media likes to stereotype younger generations as being overprotected ‘snowflakes’, it doesn’t take much digging to see why some students may have a hard time managing their money whilst studying. After all, it is unlikely that they will get a satisfactory financial education at school! So, what can you expect them to ask you for money for?
(Hint: It won’t be lattes or avocado on toast!)
Maintenance loans are designed to help your child pay for their living costs. That includes their rent, bills, food, socialising and buying anything they need to improve their studies. These are included in their Student Finance and, as such, does not need to be repaid until they have graduated and are earning a certain amount.
However, there’s a catch; the maintenance loan portion of what your child will receive, is based on your income. The more you earn, the less they will be entitled to. Therefore, it may be worth putting some of your own money aside to support them if they are not getting as much as their friends.
What about getting a job?
Yes, it’s perfectly reasonable to assume that students should be working while studying to support themselves financially. However, sometimes it just isn’t that simple. Many students are unable to work full-time due to lectures and study needs, but many part-time opportunities are offered on a zero-hour contract basis, meaning that your child may not be guaranteed enough working hours to bring in a liveable income.
If you’ve got anything left over after helping during term-time…
The cost of going to university has risen immensely over the past seven years, and that is pushing up the amount students must borrow just to get their degree. That’s before accounting for living costs and any equipment they might need to buy out of pocket. Having savings on hand to help could reduce the amount of debt they face when they finish their education.
Three good reasons to put money aside ‘just in case’:
From an early age, every parent wants to help their child to grow up and become an independent adult. However, even if you’re the type of parent who knows that their child learns best by making their own mistakes and finding solutions to them, it is still a good idea to have an emergency fund put aside on their behalf. Just in case they need a bit of a helping hand. This is because:
- Everyone makes mistakes: Think back to your own late teenage and early adult years. Chances are, it wasn’t all roses and financial freedom. Everyone experiences the learning curve that comes with paying your own bills and setting financial limits for the first time.
- Some mistakes last longer than others: While it is okay for young adults to face difficulties occasionally, which teach them valuable lessons for life, there are some situations where your help will impact their future far more than the lessons they will learn by being left alone. This includes mistakes which could end in them turning to payday loans or facing court action; both of which will impact their ability to access housing later in life. For example, both mortgage lenders and many landlords will conduct credit checks and may refuse if they see negative marks on your child’s file.
- You can involve them in the process and teach them more: The money you put aside for your child doesn’t have to be an off-limits stash. Instead, you can begin the savings journey together and involve them in making decisions about how the money is handled, using it as a vehicle to impart further knowledge about effective savings and managing money in the long term.
To discuss your options when supporting older teens and young adults in education, why not talk to a financial planner or adviser. To make it even more inclusive, why not bring your son or daughter to see us and talk about the world of personal finance before they fly the nest?