Budgeting for the real world - Macleans.ca
 

Budgeting for the real world

The OSAP Diet experiment yields results already


 

My last piece was a response to the “OSAP Diet” experiment, as undertaken by the OUSA. On first pass I was underwhelmed by the idea. Living on $7.50/day for food doesn’t seem too radical to me. But unexpectedly I find the project has become very interesting. It’s demonstrating that students are shockingly ignorant about budgeting, food costs, and the world as it appears to anyone paying their own bills.

The Varsity ran a piece in their current issue, taking students’ reactions to the campaign. I’d love to link directly to the article in the paper but I think this content doesn’t make it to their website. If anyone can find it, somewhere, please let me know. In the meanwhile, I’ll simply say that six students at random were stopped on campus and questioned on the topic, including their own budgets and spending habits. The article comes with first names and photos, but I’ll omit them for now. Let’s just say I’m protecting the ludicrous. Their comments are as follows:

  • “I think it’s hard for students living on $7.50 a day to actually get things done. It adds to the stress of trying to live day to day. I’d spend about $20 a day, or try to anyway.”
  • “I don’t think it’s enough at all. If I were living alone, I think I’d spend over $20 a day on food. I mean, just one coffee is $5, and that’s almost the entire OSAP allowance.”
  • “I’d say I spend about $15 a day, not including alcohol, but that changes during exam time due to time constraints. I certainly couldn’t live on $7.50 a day.”
  • “A meal itself is $5-10, so I’d say I spend $30-40 a day. If they can do it, good for them–if they’re not thin and gaunt by the end, that is.”
  • “I’d say I spend at least $15, and I cook a lot, so that’s not even eating out. Good food costs more than junk food, too.”
  • “That’s definitely way too low for food. It’s possible, but a bit of a stretch. I probably spend about $15 a day.”

This is a sample group of six. Probably not enough to draw elaborate conclusions from. But I’ll make some preliminary observations and then I’ll suggest that I’d love to learn more and in fact I think this experiment could have wide implications for our approach to education.

First, we’ve got the $5 coffee again. Someone needs to find whoever it is at Starbucks who managed to redefine their elaborate concoctions as reasonable daily beverage purchases and give that person an award. But leaving aside the one rhetorical point, many students seem to classify daily retail food purchases as part of a standard, baseline budget. Some simply assume that every meal must cost whatever a restaurant is charging. The difference between eating on a budget and splurging on a meal is, apparently, the distinction between MacDonald’s and sushi. And that’s just insane.

Second, most students fail at cooking and have no sense at all of how to shop. For the ones who live at home with parents this may be considered normal, perhaps. But even so, you might expect they’d know the difference between grocery shopping on a budget and not. I hate to sound like an old guy here, grumbling stupidly about “kids today,” but when I was a kid my mother took me grocery shopping. And she showed me how to find cheaper stuff and things on sale. Hell, we even bought dented cans sometimes. I’m not saying every student needs to go that far and in fact we often didn’t. But at least I learned the difference.

Third, the lowest estimate we seen to get for a single adult’s food budget is approximately $450/month. I don’t want to repeat things I wrote last piece, but do these students even know what people are living on who depend on public assistance? How can they act outraged at this travesty of a budget they’ve been stuck with (significantly subsidized at public expense) when their own assumptions imply that we’re literally starving our most vulnerable citizens to death? Maybe they haven’t added one plus one here, but it seems amazing if they haven’t.

Finally, there’s a wider trend that I wish to address. This is the issue that has the greatest implication for our system as a whole. These students aren’t really commenting on what it takes to live. They’re commenting on what it takes to live well. And they expect to live well. It goes along with their image of themselves as young professionals but also with a sense of lifestyle entitlement. It isn’t a bad thing to want to live well. Those with the income to support it are welcome to live as well as they like. But all these expectations add up. Almost $500 per month for food. And how much for an apartment? I guarantee we aren’t talking about basement bachelors here. Entertainment? Clothes? Vehicle on top of that? We’re starting to get a pretty big bill going — certainly not what most people can afford on a starting salary.

I’ve long preached against the dangers of going straight into post-secondary education, or moving from undergrad straight into graduate study, simply because you don’t know what else to do with yourself. Take that plunge when you aren’t ready and you may find you close all sorts of doors for the future. But wait until you are ready and you’ll make the most of your education and have options when you’re done. I’ve always approached this issue as though students are making this mistake simply because they don’t know what else to do and feel they must be in school. Now I realize there’s an alternative explanation.

Many students really don’t understand that you can live on $10/hour. The thought of taking some time off high school just to work and figure things out isn’t only alien to them but the budget of this life seems impossible and unsupportable. So they’ve got to enter university if only to keep feeding their $5 coffee habits. Then many students upon graduation find even the $35-40k you might earn with a bachelors degree to be unreasonable and unlivable. It’s the condo lifestyle or nothing. So for those who have the option it’s on to graduate and professional school. Not for any of the many potential good reasons — only because no one ever taught them how to live on less than a professional salary.

If we want people to make the most of their educational opportunities — and it’s only sound public policy that we should — we need to begin incorporating the idea that for any particular student there may indeed be a right time and a wrong time to benefit fully from the experience. As stands, many students seem unable to even approach this decision as a choice at all, simply because of their shocking ignorance regarding how to live on a budget. This is a real problem! Our failure to educate students in this one basic way may be interfering with their ability to learn almost everything else fully.

Okay. Rant off. But with one final observation. $5/day for a “coffee,” every day, adds up to $150/month. That’s a significant chunk of any student loan. Anyone with a habit like that, outside of the independently wealthy, might consider investing in a thermos and taking something from home. Whether your real food budget is $7.50/day or not, if you are taking on debt to pay for school at the same time, you really might want to question whether your Starbucks habit is really worth taking out a larger loan. Because that, in effect, is what’s really happening.

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Questions are welcome at jeff.rybak@utoronto.ca. You can also follow me on Twitter.


 

Budgeting for the real world

  1. It is shocking to see what people think is normal for a food budget. Here at Western someone tried to campaign for cheap lunches on campus ($2?) – but he was told that it would be impossible unless it was simply peanut butter sandwiches – WHICH YOU CAN EASILY MAKE AT HOME – and for cheaper!

    I have no idea why people think you need to eat on campus or out at a restaurant for every meal. My husband and I are living on his fairly minimal pay and the money we get from renting out the 2 extra bedrooms in our house… I got some OSAP but not anywhere close to the cap (even with the bursary the school gave me I’m nowhere near that cap!). We’re doing what we can and definitely have weeks where it’s just pasta or rice for dinner and maybe some cereal we got on sale for lunch. It sucks – but I’m glad I’m not going to have to look back and wonder if my $5 a day coffee habit was worth it (it soooo wouldn’t be!).

  2. I had a friend in university who, when he got his OSAP, would immediately pay his tuition in full and all of his rent for the whole year. With what was left he usually bought a few luxuries and then set about trying to keep himself alive on what was left.

    His favourite frugal repast was tomato soup (still less than than a dollar, I think) which he made into “a gourment meal” by sprinkling dried parsley on top.

  3. I suppose I don’t usually break down my food costs by day, because I eat out pretty rarely. But $7.50 per day is $52.50 per week. Even if I spend $8 a week on food from snack bars and cafes (I don’t drink coffee, there’s a plus), that’s still nearly $45 per week on groceries.

    I eat quite a lot of food, and it’s still pretty rare for me to spend that much. I buy things when they’re on sale ($1.27 for 10 lbs of potatoes, $2/lb frozen chicken breasts), I buy cheaper brands, I eat a lot of pasta and a lot of stir-fries. It varies week-to-week, of course, but I’d say I probably spend around $6.75 or $7.00 per day on food.

    And yeah, I eat out pretty rarely. I’m more likely to invite some friends over and cook for/with them, than go out to a restaurant. But my money is going to more important things, like tuition, and rent, and such.

  4. I can’t believe the responses they received. Maybe they were speaking to 1st year students that are on a food plan and don’t have room to cook nor an oven?

    I don’t think these kinds of food budgets are absurd. I live with my partner, and we split about 150-200$ dollars of groceries every 2 weeks. That’s about 400$, in other words, 200$ for each of us per month. And we buy quite a lot of food, and have a fully stocked pantry!
    I could never get by on 200$ a month if I was eating out every meal!

  5. I have accumulated much debt already, $39 000 with still 1 year to go. Of that, I have a $14 000 line of credit. I make payments on this, as well as credit cards each month. The majority of this was money sent home to my parents for medical reasons because I feel bad for their medication costs because they are not covered and are very much over-priced.
    I have rent, hydro, internet and phone. No TV for me. Just what I need to complete my studies and keep in touch. No, I am not one of those students who buys booze. I am not one of the ones who travels to the sunny south Carribbean (never been there before). I don’t go shopping for new clothes. I can’t remember the last time I bought something “new”. I shop at value village on the 50% off days only. When I started my part time job I found some “new” looking things at value village because I couldn’t afford something at the mall. I couldn’t justify it. I think the last movie I saw was last winter but that was because I had a voucher for a free movie. I instead enjoy the free movies on every Monday at Lakehead University. I also enjoy making coffee and taking it in my travel cup. Or, buying tea and getting hot water. Hot water is free.

    This $7.50 thing is rather funny, especially thinking of Lakehead University. Their residence caf (that any student/staff can eat at) charges $7.50 for lunch. Lunch. One meal.

    I have been to the food bank a couple of times this year. I sign up for every coupon that is of use that I can find online.

    I thought I should write this to shed light on the perspective of those students who don’t buy things they don’t need and who still struggle with bills because of other circumstances… in my case that are justified and not stupid (aka $5 dollar coffees).

  6. @Jenn – Thank you for your comments. There’s a point at which it’s hard to respond to someone’s story because you feel unqualified to do so. You’ve certainly made me feel my perspective is barely sufficient to encompass your experiences, and I’ve been on welfare at least briefly.

    Two observations. First, for everyone else’s benefit, I do believe that learning to budget and even live cheaply at times is an important character-building and educational experience. But there are limits. I don’t believe anyone should need to live in genuine poverty similar to this example. I appreciate this hasn’t been held out as a typical experience because frankly it isn’t, and it’s been caused by circumstances well outside the OSAP budget. But as an example of what can be done, at need, I think it’s very illuminating.

    Second, for Jenn’s benefit, I’d strongly recommend an appointment with your student services office (or local equivalent) to discuss any and all programs they may have to help you. Many students are entirely unaware of the last-ditch resources that are available for students. Some are intentionally not well advertised because otherwise they’d have a lot of spurious applicants. I don’t know exactly what’s available at Lakehead for you, but if you seek a personal appointment and ask you may find something – if you haven’t already, of course.

    Beyond that I can only wish you good luck.

  7. My son is looking in to various colleges right now. While we are in the US and not Vancouver, food costs definitely adds to the equation when looking at the ‘total’ cost of schooling. He’s looking in cities that vary from New York City to some that have 10,000 total people. That $5 Starbucks is even more in NYC. The cost of living is a world of difference.