How to Manage Your Finances as a Parent Going Back to School
February 17, 2021
The pandemic has greatly impacted the current job market. It has had a positive impact on some industries, while for others the situation has become difficult. As certain sectors have plenty of manpower available and others are experiencing a labour shortage, this dynamic creates interesting opportunities for unemployed workers, who are being offered a second chance in a different field. While the option of going back to school was seldom considered before, it has become very interesting nowadays.
Making the Decision to Go Back to School
Going back to school is not just about money, it’s also a matter of passion. Yes, it’s an investment, but what better investment than making a choice that will make you happy!
This decision shouldn’t be made lightly. I strongly recommend you see a guidance counsellor, which I did myself before making my final choice. Making sure it’s a good choice is crucial. It’s not like baseball where players have three chances before being removed; changing careers can have serious consequences!
Far be it from me to praise the pandemic, but this situation has certainly created more favourable conditions for going back to school. For instance, most classes are now online, which means more flexibility, especially for parents! Online classes are easier to fit into a busy schedule and spare students from having to travel to and from campus.
Once you're certain of your decision, you’ll have to be disciplined and motivated to go back to school, even if it’s online school!
Planning Your Finances
To have more money ahead of you, you must either increase your income or lower your expenses! Let’s start with solutions for increasing your money flow.
Loans and Bursaries
Turning to loans and bursaries might have been your first instinct. You should know that many post-secondary institutions have merit and admission scholarship programs. Although the application process might take you some time, this is a great investment! Getting a scholarship not only gets you extra money, but it also looks great on a CV.
In addition, in Quebec, you can rely on the provincial government’s Student Financial Assistance program. The Quebec Government has invested an additional $300 million in this program to provide more support to students during the pandemic. As the challenge is even greater when you have children, know that the financial support the program offers to families is also increased if you have dependent children. What’s great is that even if you study part time, the program can deem you a full-time student. This way, you can receive more loans and bursaries. However, be aware that this status is only valid with the Student Financial Assistance program, meaning it’s not a universal status and it usually doesn’t give you any advantages with educational institutions. But certain schools have been working hard over the last few years to define an official student-parent status.
If you’ve decided to change careers and go back to school full time, you should consider lightening your course load and taking more time to complete your degree so you can work part time in your new field. If this is a viable option, it will allow you to reduce the financial burden of your studies in addition to gaining experience and making a name for yourself before you even graduate!
Second-hand economy can also generate extra income and can even be a good investment, especially for children items. Selling stuff that you don’t use anymore finances new purchases, while buying second-hand allows you to save on cost and get more bang for your buck!
There is a program similar to the Home Buyers’ Plan (HBP) that is not as well known: the Lifelong Learning Plan (LLP). The LLP allows you to withdraw sums from your Registered Retirement Savings Plan (RRSP), tax free, when you’re enrolled in a full-time program of study at a designated institution. This means you can self-finance your education by up to $10,000 per year, for a maximum of $20,000, even if you’ve already benefited from the HBP. What’s great about the LLP is that your spouse can also contribute, which doubles the sums available to finance your studies. You have to repay these withdrawals within 10 years, at the rate of 1/10 per year.
The Quebec Government just invested $115 million to establish the Renewed Prosperity Through Greater Training Program (PARAF). Its objective is to provide financial assistance to people who are unemployed due to the pandemic to help them acquire new skills that lead to jobs which are currently in demand. This support is provided as a weekly $500 employment assistance benefit, a very interesting incentive in the context of the pandemic!
In a fragile economy, it’s always a good idea to reduce your expenses to a minimum. However, when necessary, you can be smart about how you incur debt. Without encouraging you to accumulate debt, you’re better off choosing a debt that has the smallest cost possible. For example, the home equity1 available on a house is more interesting than an unpaid credit card balance. Right now, mortgage rates are very advantageous. Another example is the tax credits that can be claimed for interest paid on student loans. This particularity can make paying interest more advantageous tax-wise compared to taking on other types of credits or loans.
Of course, I saw a financial planner and a financial security advisor to assess my ability to face the challenge of going back to school and better know the extent of the debts I could incur. This definitely reduced my financial anxiety and I strongly recommend you do the same.
If you decide to move forward with this project, make sure your loved ones have your back (especially if you have children!) It is crucial that your spouse support you and understand your new reality.
In addition, if you’re a parent, you’ll certainly be able to seek support from your school’s association for students who are parents. And not only support, but also comfort and socialization! These associations do everything in their power to defend the interests of student parents.
Being simultaneously a parent, student and worker requires to be organized. It’s normal to feel overwhelmed sometimes and feel like the situation is out of control! Be aware of your limits and don’t hesitate to get the help you need to get back on your feet if you feel you need it.
In conclusion, every project is achievable and there are tools available to help you out! Since the current context makes it easier to go back to school, why not give it a try and take on a new challenge?
1.Difference between the market value of your home and your mortgage balance.