You’re walking to your 8:30 a.m. class when you smell the sweet aroma of fresh coffee, followed by the sinking feeling of debt. You can’t afford a coffee, no matter how tired you are. Not today, not tomorrow.
But you could—if you managed your money better.
The average Ontario post-secondary university student graduates with $37,000 in student debt from both public and private loans, according to the Canadian Federation of Students Ontario.
In order to pay that off, you’d need to work 2,545 hours at minimum wage, or 64 full-time work weeks. That’s a lot of working, and not a lot of living for a student or recent graduate. Add in time to go to classes, do school work, and possibly go to the bar, and you’ll start to see that paying off student loans is hard—and time consuming.
Budgeting your money is clearly essential, but what is budgeting?
According to Carleton’s budgeting web page, “A budget lets you know what you can spend and when you can spend it.”
Seems easy enough, right?
“Being a full-time student is expensive,” Carla Hindman, director of financial literacy at Visa Canada, said in an email. “For some students, going to school marks the first time they are in charge of their own finances—so it’ll take some adjustment, especially if they haven’t learned about basic money management at home or at school.”
Everyone budgets differently. Some may budget by year, by month, or by week.
The way you obtain money determines the way you budget, said Tiffany Aliche, founder of thebudgetnista.com. If you make a weekly or biweekly paycheque, you put aside a dollar figure every cheque. If you are living off of Ontario Student Assistance Program (OSAP) or bank loans, you would put aside a percentage of that loan. Adjust your budgeting to suit your income.
Whether you budget by month, week, or even year, learning to budget is vital, Aliche said. Budgeting as a student will only help you as you grow older.
“A budget is a budget is a budget,” Aliche said—whether you are budgeting for textbooks or for a mortgage, the elements are the same.
According to Roksolana McVicar, a second-year psychology student at the University of Ottawa, the real problem is lack of knowledge among students about finances.
“Finances as a whole are a mystery to most students. There is nothing offered to these young people who are going off into the post-secondary world except a pat on the back and the promises of student loans,” McVicar said.
“Nowhere are we taught to budget, to save, to balance work and school, to pay things on time, or how immensely tempting it is to max out credit card limits on some stuff we didn’t need.”
Student loans aren’t free money. All that money OSAP gives you, or your bank has loaned you, is just borrowed. You’ll have to pay it back, and fast.
“Students are obligated to start paying off student loans within six months of finishing school,” Hindman said. “During school, if a student can manage a part-time job, they might be able to save a little to put a small lump sum towards their loans at graduation.”
A good way to start thinking with the mindset of a budgeter is to think, “save first, spend last,” Aliche said. Most people spend first and save last, but that doesn’t work when you are working with a budget. Your necessities come first.
John Schmoll Jr., Founder of Frugal Rules, said in an email his budget advice to students is to “avoid lifestyle inflation.”
“Don’t give into the desire to buy things you can’t afford,” Schmoll Jr. said.
Schmoll Jr. said if you can’t afford to go to the bar on Friday night and a party Saturday, pick one. Or don’t do either, and change up your options.
“Sometimes it’s just as much fun to buy a bag of chips and sit on your couch and hang out,” Clare Bonnyman, a fourth-year Carleton student, said.
Budgeting seems like a scary word, but in reality it can be a life saver.
As Schmoll Jr. said, “You can do it—the key is starting.”
