Wednesday, May 30, 2012

A Penny Saved

Visa conducted a survey of American families with teenagers who said they would spend an average of $1,078 this year on the prom, a 33.6% boost over the $807 spent in 2011. The most interesting part was the data revealed that the higher the family income, the less spent on prom.
o    Parents who make under $20,000 will spend an average of $1,200
o    Parents who make $20,000-$29,999 will spend an average of $2,635
o    Parents who make $30,000-$39,999 will spend an average of $801
o    Parents who make $40,000-$49,999 will spend an average of $695
o    Parents who make over $50,000 will spend an average of $988
o    Parents who make over $75,000 will spend an average of $842
One expert suggested that because people are getting married later, parents are looking for reasons to celebrate and as is customary nowadays, we overindulge in our children. For our family—maybe because fashion, shoes, makeup, and hair are not my forte and definitely because I am confident that my daughter’s prom will not be the highlight of her entire life—our total prom bill will be as reasonable as we can manage while still honouring this milestone. But I can see all around me how tempting it is to want it all because we are surrounded with access to seemingly unlimited choices.
On CBC radio, I listened to a psychiatrist explain how middle-class people are pushing their limits to have bigger houses or expensive weddings but are reporting to be no happier than people 30 years ago were. In fact, he says we now tend to have more mental health issues because our values are distorted. You need only watch one episode of the TV show Say Yes to the Dress or MTV Cribs to see how our spending has gone out of whack and how the measure of success is determined by what’s parked in our driveway.
Thankfully, our daughter sees the bigger picture of her graduating year. She chose to spend a week volunteering for Habitat for Humanity in New Orleans knowing that would reduce her prom budget and she is aware of the large price tag for university this year. I have the getsmarteraboutmoney.ca scholarship contest to thank for having her calculate a budget for the income and expenses she will incur over the next year, which, truth be told, is even more than I expected when all is said and done.    
We are looking to the government for help with student loans and I am discovering that their calculations to determine need are just as odd as our society’s spending habits. A student who has saved money in a bank account or has earned money from working more hours has to claim that amount in their application and therefore their loan is reduced dollar for dollar for having that asset (for more info about recommendations to improve OSAP see: http://www.raereview.utoronto.ca/UTresponse_17_appendixB.html ).
The student would be better off spending their money or working less to show greater need. Our provincial government currently caps the amount of debt owing each year at a little over $7000, which is good, except the student has to come up with the remainder (OSAP estimates the cost of 8 months of university at @$17000) if they do not qualify for other grants.
In my simplified version of a better world, I would like to see tuition costs for any post-secondary education be free for all those willing to do the work. So instead of OSAP arbitrarily determining a family’s ability to pay for the student’s education, most people would have access to local schooling opportunities at a reduced cost, and then, if the student were to study elsewhere, they have made the choice to incur added expenses, and should be given a full student loan to use as needed, depending on their means, with the responsibility to pay for those outstanding debts. That’s my two cents for today.  
Education is the best way for a country to invest in the future and uplift all of its citizens. Then maybe we would see more value in ourselves rather than in our possessions.

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