A new financial adventure: Managing money in college or university
November 13, 2017
By Jane Rooney, Canada’s Financial Literacy Leader
The third week of Financial Literacy Month is here already. There are events taking place all across the country so if you can, please take part!
There are certain key points in everyone’s lives when financial literacy is more important than ever. This week’s theme is all about that exciting moment when young people step out on their own, into the world of post-secondary education.
Starting out on this big adventure is full of new challenges. I know this first-hand as a parent because my two sons have both pursued post-secondary studies – one at college and one at university. It’s fun to watch them grow and use some of the financial skills they picked up as children and teenagers, while also learning new ones.
The basics of good money management for students are:
- making a budget
- applying for free money
- understanding the challenges and pitfalls of student debt
- paying your bills on time and understanding the contracts you sign
A budget is like a map of your income, expenses and savings. The 2014 Canadian Financial Capability Survey found only one third of 18-24 year olds have one. Many people who would like to use a budget say they don’t know where to start.
A budget can help you manage your money throughout the term, so you don’t find yourself short in the last month. A budget can also reduce stress, help you avoid excessive debt, and save for tomorrow.
When making your budget, it helps to consider where your money will come from. Your income may come from personal savings or from working while going to school. But it’s always worth trying to supplement those sources with free money in the form of scholarships, bursaries and grants. These can come from the federal and provincial/territorial governments as well as from colleges, universities and other institutions. FCAC has contributed material to a web page devoted to the various forms of education funding on Canada.ca.
Once you know where your money’s coming from, it’s important to watch where it’s going. Review your bills and statements regularly to see where you are spending money. Paying your bills in full and on time helps you to maintain a good credit history, build your credit score, and avoid interest charges and other fees. If you can’t pay them in full, it’s important to pay more than the minimum on your bills whenever you can – this will help pay off your balance faster and reduce the total interest you pay.
Another first for many post-secondary students is often their first credit card. The average annual interest rate for student credit cards in Canada is 18.11 percent, which can add up quickly in interest charges if you carry a balance! You can easily find lower interest rate credit cards using FCAC’s newly revamped Credit Card Comparison Tool. Make sure to choose your credit card wisely and carefully review any contract you sign.
If you use a credit card, it's important to pay your balance in full, and to check all of your transactions to make sure you authorized them, and aren’t a victim of fraud. If you notice any purchases that you didn't make, contact your financial institution immediately to report it.
It’s not always easy, but learning to manage money and debt wisely when you are a student will help you reach your goals, in education and in life. Make sure to learn the financial basics – start with a budget, understand debt, and pay your bills in full and on time – so you can graduate with more opportunities than obstacles. I wish you all the best in this next chapter!
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