Students starting university experience a lot of firsts, including managing a household budget (even if he or she is the entire household). Here are nine student financial tips to help them manage their finances, get good value and minimize reckless spending.
1. Talk numbers
Parents and students should discuss a battle plan for the year. “Sit down with a child who isn’t comfortable with numbers and help them set up a budget,” advises certified financial planner Jason Heath. “Many of the university websites outline expenses for living on campus. Look these up and go through them with your child before they go off to university.” Parents should run the numbers with their kids as well, advises Annie Kvick, a money coach in North Vancouver. “Let your kids know how much four years of university costs, how much you’ve saved up and how much you expect them to contribute to the final bill,” she says. Also determine whether a part-time job is required. “There should be a frank and open discussion about expectations.”
A simple spreadsheet where all income (including registered education savings plan money, part-time student earnings, scholarship money and government loans) and expenses (tuition, room and board, books) for the year are outlined is a good budgeting tool.
Freshmen need to understand the difference between student loans, grants and lines of credit. Families should discuss payback times for loans and how university students shouldn’t overextend themselves. Students should aim to have all their student debt paid off by age 30 so it won’t interfere with other stages in life—marriage, buying a home, kids and daycare.
READ MORE: The price tag for students who live at home
2. Discuss a university allowance
Students should have a fixed allowance for extras. “The trick is finding a balance,” says certified financial planner Heather Franklin. “One way to do it may be $300 a month to cover the odd coffee out, beer night and transportation,” says Franklin. “But make sure they understand that that’s all they’ll be getting. Anything more will have to come from their own part-time earnings.” Parents need to be careful not to reduce everything to dollars and cents. “They are in university to get an education but also to help them find a passion that will last a lifetime,” says Heath. “So set reasonable boundaries so there’s enough money to enjoy extracurricular activities while not breaking the bank.”
3. Split the cost of textbooks with a classmate
Depending on the course, students can save hundreds of dollars each semester by buying used textbooks or sharing the cost of new ones with a classmate. “I had semesters where my textbook bills were over $1,000, and I eventually learned that splitting the bill with another student would save me substantial money over the course of my degree,” says Brandon Silbermann, a recent graduate and financial adviser with Manulife Securities Investment Services in Waterloo, Ont.
4. Learn to cook
Constantly buying food at restaurants is expensive on a student budget. Students need a copy of a good cookbook such as How to Cook Everything by New York Times food columnist Mark Bittman. Parents can help by sharing a few tried and true recipes before students go off to university.
5. Hone comparison-shopping skills
If students are willing to look, there are plenty of ways to save money on the things they use every day. Parents can help by taking them grocery shopping and introducing them to stores such as No Frills and Food Basics, which are bare-bones grocery stores with rock-bottom prices. “I soon learned that a can of peas or beans that was $1.12 at Loblaws was just 88 cents at No Frills,” says recent Ryerson University graduate Halla Iman, 25. “I could see that my budget worked out better if I shopped at No Frills, even though Loblaws was so much nicer.”
6. Buy used whenever possible
Items like furniture, pots, pans and small appliances are easy to find on Kijiji and VarageSale. If you’re looking for something in particular, post an ad and be creative. For instance, a headline like “I’ll trade my 10-speed bicycle for your Ikea couch” is sure to grab someone’s attention.
7. Get your first credit card
Look for a card with a low rate and no annual fee—preferably one that has the word “student” in its name. “The BMO SPC CashBack MasterCard is one good choice,” says Leonie Tait, a spokesperson for RateSupermarket.ca in Toronto. “It has no annual fee and offers one per cent cash back on purchases as well as discounts at certain SPC partner retailers.” Don’t be persuaded to sign up for a card by an on-campus promotion. “Students shouldn’t sign up for anything on the spot at university,” says Tait. Instead, do your research. “Have a conversation with your parents or a bank manager on how fees and interest on credit cards work,” says Tait. “And read the fine print. Fees are only hidden if you don’t know about them.” MoneySense magazine has a useful comparison of credit cards. Once you’ve found a good card, put a very low spending limit on it—say $500 per month. Then set up this bill for auto-pay (as well as your cellphone bill and transit pass). One late payment can have long-term repercussions to your credit history, so play it safe by paying bills automatically. One tip: “Stick to only making large purchases on [the card], such as buying your books or a train ticket home at Christmas,” says Franklin. “Any other spending comes out of your cash allowance or other part-time earnings you may have that month.” When your bill arrives monthly, make sure you pay it off in full. “A credit card is also good for building credit history, and by paying your credit card debt off every month, you’ll be ensuring that when you need loans for other purchases in future—such as for a mortgage— you’ll be able to borrow at the most attractive rates,” says Tait.
8. Consider a work-study program
These programs offer part-time, on-campus jobs for full-time students with financial needs. For instance, the work-study program at the University of Waterloo will fund 75 per cent of the student’s salary, up to a maximum of $1,500 per term. Students should check out what’s available at their university.
9. Choose to live at home
Okay, we know students aren’t going to like this one. But one of the best methods of saving money while going to university is to live with your parents. It’s not just the room and board you’re saving, but also the cost of utilities and even food. It may not sound exciting, but the money saved can be used to pay off student loans, save for a condo or take a break to travel before settling into a full-time job.
This is an update of a story originally published on October 19, 2017.
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