“You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose. You’re on your own. And you know what you know. You are the one who’ll decide where to go.” –Dr. Seuss
15 years ago, when I first came to Canada, I worked as a Nanny. As a qualified teacher, working as a nanny was definitely not what I had intended to do after graduation but, as it turned out; it was one of the best things that could have happened to me. Not only did it open some incredible doors for me but It’s a relationship that has continued and strengthened over the 9 years since I stopped working for them. It gave me the experience of being a “spare mom” to two wonderful boys and a chance to become part of an amazing family. This week, “my” youngest boy headed off to college and so I thought it would be fitting to share some money strategies for students in this week’s post:
1. Get the Right Bank Account
As with every money decision, it makes sense to do your research. Often, when it comes to choosing a bank we stick with whichever institution our childhood accounts were set up with or we choose the same bank our parents use. However, although all five of the major banks (RBC, TD, Scotia, CIBC and BMO) offer no-fee student accounts, the benefits of each account vary significantly. For example, only CIBC and Scotia offer no-fee student accounts with unlimited transactions. (TD & RBC allow 25 free transactions/mth and BMO allows 30). RBC & BMO include a certain number of free Interac e-transfers per month whereas each of the other bank charges $1.50 per transaction.
Related article: Do you have the right bank account?
Before deciding which account is right for you, take some time to think about the number (and type) of transactions you’re likely to do each month and calculate how much they will cost you with each institution. Investing a little time now could save you hundreds of dollars over the 3-4 years you’re in school.
2. Understand Your Cashflow
One of the basic principles of good money management is to understand your cashflow. Simply put, you need to know how much money is flowing into your account and how much is flowing out. One of the most challenging things for students when it comes to managing money is dealing with having a large amount of money at the beginning of each semester when student loans are paid out that has to last for several months.
Related article: Know you spending
Without a clear plan, it’s all too easy to overspend at the beginning of the semester and that can make things really tough later on. Taking a little time at the beginning of the school year to determine how that money should be spent will save you a lot of stress.
3. Keep Your Play Money Separate!
Once you understand your cashflow, you’ll know how much money you actually have left over for treats and splurges. Put that money in a separate account (perhaps with a different institution) so that there’s no risk that your rent money will be accidentally “repurposed” for a night out at the bar, a new pair of shoes or a great deal on electronics.
4. Look For Discounts
Lots of stores offer student discounts. Some of them apply all the time, some only on certain days. Doing most of your grocery shopping on ‘student day’ can save you a surprising amount of money over the course of your student career. Similarly, shopping for clothes, electronics and other items at discount stores, online or at certain stores can add up to great savings over time and money saved on everyday things means less debt and more money to spend on fun stuff!
Related article: Is it trendy to be frugal?
5. Be Cautious With Credit
One of the biggest traps available for students to fall into is the credit trap. When money is tight, it can be tempting to take advantage of the many credit options that are available to students. Whether it’s a credit card or a line of credit It’s important to remember that credit is big business and it makes a LOT of money for the financial institutions that offer it. Offers of credit to students are often made based on future earning potential not on your current ability to qualify and, as a result, far too many students find themselves graduating with a huge amount of consumer debt. Just making the minimum payments means handing over a lot of your hard earned money to your financial institution for the privilege of borrowing money.
Related articles: Strategies to manage debt
Contrary to popular belief, getting a credit card is not the best way to build your credit score, especially if you end up carrying a large balance or missing payments. Debt may be a fact of student life for many but be cautious about taking on more debt than is absolutely necessary and be aware that just because your bank is offering you a credit card, it doesn’t mean that it’s in your best interests to take it. As with any other financial decision, do your research, talk to people you trust and then make an informed decision based on your personal circumstances.
The time spent at college or university is about growing and learning in so many ways, not just academically. Further education is a training ground for life and an opportunity to make conscious decisions about the person you wish to be and the life you want to build for yourself. Learn, grow, make mistakes and don’t be afraid to fail. (Some of the most successful people built their greatest successes from their greatest “failures”). Learning to handle money and live life on your own is a key part of the learning experience and if you can master it, you will have laid the foundation for a sound financial future.