Most people who have attended college or university - myself included - will tell you: school is a time for very frugal living, and even occasionally a time for financial hardship. With or without a part-time job, living through a period devoted to studies can be quite a challenge. Many freshmen students soon learn that managing money is no easy task. Stripped of the comfort and security of having their needs met by others, many students suddenly must confront life’s harsh economic realities on their own.
College life without financial smarts – and goal oriented thinking - can be a worry and a grind, even with the bank of mom and dad on hand for support. Getting a post-secondary education nowadays costs plenty. Indeed, if you’ve been watching the TV news lately, you’ve probably seen students protesting tuition fees everywhere from California to Quebec.
Tuition fees vary depending on the field of study. In terms of average annual tuition costs in Canada for 2012, students can expect to spend about $5,000 to $6,000 a year for degrees in fields such as education, communications, and business, and about $6,000 to $16,000 for degrees in fields such as engineering, law, and medicine. Add to these figures reasonable estimates of $10,000 to $15,000 for student living expenses, and the tally for annual educational expenditures is no small deal. True, student loans help to ease matters, but only for the moment. Think of the borrowed money - with interest - as a deduction from future income.
Clearly, financial literacy has a vital role to play for college students and their families. This means understanding the benefits of budgeting, taking steps to track and control spending throughout all school terms, and making a serious and sustained effort to curtail the use of credit over and above borrowing through student loans.
Let me highlight that dreaded B-word again - budgeting. Students who prepare written budgets – and who keep track of finances and stay on plan - not only tend to enjoy college more, they are in a better position to do well in their studies because they are less likely to be distracted by money problems or anxious about needs for daily living. I’m talking about budgets that realistically address both monthly and school-term needs on all levels.
Such budgeting involves a very serious approach to spending, which must be premised only on actual income, and dutifully tracked to ensure there is no overspending, particularly frivolous overspending. Practically speaking, beyond tuition and book costs, a student budget should outline expenditures for living covering accommodation, food, and life essentials. As well, ideally speaking, an emergency fund (whatever is affordable) should be set aside for the unexpected. Beyond that, “fun money” can come into play, but never at the expense of any of the above.
I know all this sounds very strict and regimented. For students, budgeting is not a sexy topic. It evokes notions of drudgery, sacrifice, and limitation. But let me tell you, all that sort of thinking is merely the result of the attitude students decide to take toward financial matters. A negative outlook has no more validity than framing circumstances in a positive light. A student can decide to change his or her attitude towards finances, and that decision can change one’s whole outlook on life - for the better.
Frame limitation in terms of the noble and exciting goal you are pursuing as a student – which is to graduate and set the foundation for life-long challenges in a field that you enjoy – and suddenly the idea of budgeting takes on appealing new aspects. Like the mythic hero Jason, you become an adventurer on a journey to obtain the Golden Fleece. You will have to brave storms and slay dragons on the way to your goal, but these challenges become a sporting part of the adventure.
To college students with money problems who come to us for help at Credit Canada Debt Solutions, we always emphasize one point in particular - never lose sight of your goals kid, especially when you’re feeling down. Goals give you purpose. They motivate you. They give you a sense of direction, and bring imagination to life. Or look at it this way: instead of thinking about sticking to a budget, think about sticking to your goals, with a budget being merely a vehicle that helps get you on your way.
This brings me to another dragon students often confront on their journey of discovery: bad credit card debt. You can be sure that even as I write these words in early September, banks and credit card companies are busily readying their promotional kiosks to pitch credit cards to students in the hallways of colleges and universities across Canada. That’s fine. There’s nothing wrong with credit in theory. And, in fact, credit cards add a welcome measure of security and convenience to life – but only when the cards are used intelligently.
Students in particular should be wary of racking up credit card debt. I know that when you’ve little income to begin with, the temptation to use plastic is great. But, trust me on this, the high-interest debt pains often experienced by free spending students down the road is far greater than the immediate and fleeting pleasures easy credit can offer. Credit card use should be strictly limited to situations where the use of cash or direct debiting is simply too inconvenient or not possible. Moreover, all expenditures by credit card should be framed within the spending plan outlined in a personal budget. In terms of fun money, pay only cash, and leave the credit card at home – possibly even frozen in a block of ice.
Last but not least on my financial survival list for students is the matter of savings. True, most students are not in a position to build on a bank savings account. But there are other ways to save in life, and let’s not forget that only a fool would ignore the many goods and services discounts that apply to students these days. Far be it for me – a middle aged woman – to tell today’s gregarious, tech-savvy students about advantages for savings on all kinds of things through a little online research and word-of-mouth news around campus. Nor do I feel the need to lecture students about issues of pride in relation to couponing and hitting the discount, dollar, and used goods stores.
Then there’s the matter of the fun money I’ve mentioned. Is it actually possible to turn some of that green into savings? Perhaps so. As I see it, with more online research and a little creativity, all kinds of cheap fun and freebies are out there waiting to be experienced – concerts, lectures, movies, volunteer activities – you name it. Not to mention, imaginative minds need only spend time, rather than money, to enjoy life.
Just remember dear students, the Golden Fleece awaits you.