The start of the school year is an exciting time. It means giddy reunions with your friends, welcome back parties, cracking open… brand new notebooks, lugging textbooks across campus, nuking ramen noodles for dinner… OK, maybe the last two aren’t as exciting, but you get the point.
It also means controlling your finances to get you through the school year. While credit cards and student loans are easy to default to, you don’t want to graduate with a degree in one hand and a big pile of bills in the other. Here are some common student money mistakes to avoid, so you can spend more time procrastinating on your term paper at the campus library, and less time sweating over how you’ll pay for your next meal.
Money mistake 1: Not setting a budget.
- A good place to start right out the gate is to create a realistic budget and stick to it. The thought of creating a budget may make you sigh and roll your eyes, but don’t underestimate the power of a proper financial plan.
- Look for opportunities to reduce spending, especially eating out, going to the pub or online shopping.
- Eating out every night or buying food from the campus café can add up big time. Planning your meals ahead of time and making them with healthy ingredients will not only lighten the load on your wallet, you’ll probably feel better too.
Money mistake 2: Not being careful with your credit card.
It’s okay to have a credit card, especially since they can help build up credit for the future. But they can be risky if you don’t keep an eye on your spending habits.
- Look at the fine print. Be sure you know the terms and conditions, including penalties for not paying on time, fees, etc.
- Look into student credit cards. If you decide a credit card is a good option for you, most banks and credit unions offer cards just for students. They’ll often start you off with a lower limit so you can get used to using a credit card without potentially over-extending yourself.
- Don’t spend more than you can pay off each month. Your future self will thank you, too.
Money mistake 3: Paying full price.
- Textbooks can be costly. Look at online forums (craigslist, Facebook groups) for other students trading their books and save some major dough.
- Take advantage of student discounts – students all over Canada are offered special rates and discounts at countless retailers, restaurants, and venues near or on campus. You should always look for opportunities to save on necessities like personal care products, food, and household supplies too. Because everyone likes free toothpaste and KD, right?
Money mistake 4: Missing out on opportunities.
- There are many scholarships, grants and bursaries that are awarded simply on a first come, first serve basis and require an essay – not necessarily top marks. All you need to do is a little digging. Talk to your student advisor, call the bursary office and look online to suss out your options.
Money mistake 5: Losing track of debt.
- Make sure your budget factors in debt repayment as well as monthly savings. Debt accrues from things like credit cards and student loans (although a student loan is a good kind of debt).
- When paying down debt, be sure you focus on the loan with the highest interest rate first. Usually that’s your credit card. Then contribute to your savings. For example, if you have $400 to dedicate to both savings and debt repayment, try $300 going to debt repayment and $100 going to savings.
Money mistake 6: Not having an emergency fund.
- Life happens. Cars break down, people lose jobs. If you have a slush fund at the ready, you’ll reduce a lot of the stress that comes with those unexpected events.
- Your emergency fund should have enough money to carry you for three to five months of unemployment, if possible. Let’s say your costs are $1,200 a month. Keep at least $3,600 aside and available in case of emergency. We know – that’s tough to do as a student, but do your best. By getting these savings habits in place now, it will be easier to save when you’re making more money in the future.
Money mistake 7: Not setting yourself up for success.
- Separate your needs from your desires. This will probably be the hardest one to stick by. Your friends may want to go to the new sushi joint with the fancy rolls, but at $15 a roll, is it worth it? Probably in the short term, yes, but long term? Nope. Friends don’t let friends go into debt.
- Set it and forget it. If you’re working part-time, think about setting up an automatic withdrawal every paycheque. That way, a little bit of money will come out of your account and go directly into your savings. It will help build your savings much faster than if you were solely depending on your own will power.
- Keep an account aside that is not accessible by your bank card, that way you can’t dip into your savings on a whim.
Money mistake 8: Not asking for help.
- Set up a meeting with a financial advisor. They can help you make a plan to manage your spending and obligations, like your student loan, and help you plan for your future. Because the only thing that’s better than graduating is graduating without a hole in your pocket.