By: Chelsea Brunette
Now that the first month of school has come and gone, first-year college and university students fresh out of high school are hit with the alarming reality that money actually plays a large part in their survival.
Circumstances like income or lack of and expenses can vary between students, making it easy for them to graduate with debt. But how do students get to this point?
“Some of these students leaving home for the first time have never had to set up a budget,” said Algonquin’s business accounting co-ordinator, Lee-Ann McDougall. “And understand this is the kind of money [they] have available and what money is going to come in the future and what [their] expenditures are going to be.”
A common issue amongst students is frivolous spending which can make supporting themselves for the rest of the school year complicated. A preventative measure that McDougall suggests is that students try to figure out what bills and payments are due to know exactly how much money they will need and when they’ll need it for.
According to Algonquin’s business administration co-ordinator, Jerry Aubin another problem that students experience is the pressure to have and want the latest trends. They’re made to believe that they need these things, not just want them.
“[They] get to a point where [they] say ‘Uh-oh, here’s my monthly payments and I can’t cover them’,” said Aubin.
Becoming a master of personal finances can be easy, learning how to do without is a big part of it. By learning how to live without certain luxury items, students can prevent further debt. However, many electronically dependant students don’t know what it means to go without.
“I’m always amazed at people who say ‘I have no money at all, I can’t even buy groceries this week’ but they’ve got the cell phones, the latest and greatest,” said Alison Dubois, professor and coordinator in the business accounting program at Algonquin.
According to TD Canada Trust’s website, the first step in developing a worthwhile budget is to figure out how much income will be coming in during a month, which includes loans, work, bursaries, etc. Next is figuring out the expenses. Expenses include the costs of living, like shelter, food, tuition and books. And by creating an actual spreadsheet on Excel or in a notebook it helps to visualize the costs of needs and wants, seeing which is most important.
The next step, according to McDougall is to learn the difference between wants and needs and make sure the needs always come first. If by at the end of the month there’s any cash left over from the funds for needs , then put that towards wants.
Aubin recommends cost savings in any area that it’s possible in. Buy the electronic copies of textbooks, or a used copy. Take public transit to school or a bicycle instead of driving in. Utilize the options wherever possible.
As far as wants go, McDougall suggests reinventing them. Have a potluck with friends instead of eating out, buy used furniture instead of new, go to a free event instead of a costly one. By learning how to cut in these areas while still in college or university, you will create future budgeting habits.
“Everybody needs a budget, not just at the student level,” said McDougall. “This is the perfect time to start thinking about budgeting, it’s a life skill you’ll use throughout your life.”