It’s that time of year. Post-secondary students have headed back to college or university. And the second biggest concern after boosting your grade point average? Will I have enough money to make it through the school year?
Whether your education is being bank rolled by your own savings from a summer job, part-time work through the school year, student loans, credit or the bank of mom and/or dad, making money last until the spring requires some financial planning and budgeting.
Unfortunately, financial literacy skills such as budgeting and money management aren’t often taught in the classroom, rather they are something you may need to learn on your own.
The goal is to try to avoid accumulating more school debt then you need to. This will help reduce the amount of student loan debt you will have to repay after graduation.
Here are a few tips to help you make it through the school year in good financial standing.
• Budgeting — Browse the Internet or check out the resources provided by your university or college for a good student budgeting worksheet or an online tool to help you manage your cash flow and expenses. Recording what you spend will help you see where your money goes. This can help you identify areas where you can make adjustments to help save cash, such as making your own lunches or cutting down on coffees.
• Keep separate bank accounts — If you received a lump sum payment at the start of the year, consider creating a separate account for the money you need for rent, tuition, books and other fixed expenses such as a cellphone and car insurance. Use another account for your personal spending such as food, transportation and entertainment. This can help keep your finances more organized and help you avoid spending your rent money on drinks at the pub. Also be sure to check out student banking plans to help you save money on bank fees, overdraft interest rates and other charges.
• Be smart with credit cards — If you plan to use a credit card, plan to use it for convenience, not as a source of credit or cash. Compare the types of cards the banks offer to students and choose a card that fits your needs and always pay the balance in full. Only paying the minimum amount due on a credit card may look appealing but the interest charges can quickly increase your credit card debt level and impact your credit rating.
•Maintain a good credit rating — If you are using a student line of credit or bank loan to help fund your education, always make your minimum payments, and where possible, pay more. Building and keeping a strong credit rating when you are young will help you in the future.
•Reward yourself — School shouldn’t be all work and no play. It’s important to allocate part of your budget for you to use for fun and entertainment.
Managing money while concentrating on your school life can be a challenge and if you are like many Canadian students who rely on student loans to pay for school, post-school debt will be a reality — but by developing sound budgeting and money management habits now, you will be armed with a very important life skill.
» Wayne K. Palmer is a senior manger in BDO’s Brandon office. He is responsible for both the consumer and commercial practices in Brandon and surrounding areas, including Boissevain, Minnedosa, Neepawa and Dauphin. Wayne has more then 25 years experience in the financial recovery services field.
Republished from the Brandon Sun print edition October 6, 2012