Mistakes University Students Make with Their Money

When students go to university or college for the first time, managing their money may be another first. It’s important for students to gain an appreciation for how to spend, save, and plan for the future, especially if they are paying for their own education. Here are some tips and some traps to avoid.

Moving to a distant school
When you aren’t familiar with your university or college community, you may make poor financial choices. This means paying more for a place to live, for food, and for transportation back and forth every term.

Students shouldn’t feel constrained to their local educational institution, but planning ahead for the extra expenses of a first year in a different province or overseas needs to be a part of the equation. Plan financially as well as academically for the choices ahead. Research the tuition, the flight costs per year, as well as the cost of living for the community before making a decision.

Getting access to student loans
Many students get an influx of cash from student loans and spend it right away, thereby leaving them strapped for the rest of the term or even the whole academic year.

While some students make careful choices, or even invest their student loans in short term GICs to create income, this isn’t the case for many. Parents should go over all of the options with their children to manage their money and their ideas for how it ought to be spent in order to avoid running out of money before the school year is up.

Counting on scholarships and bursaries
Yes, you can get scholarships, but you need a plan for attaining these in the same way you need a plan for getting into university and college in the first place. You don’t always need the best grades, but you do have to put in the time and effort to make your case to those who can help you out. Do your research, and reach out to those who may be able to help you at your new school. Talk with an advisor to see what is right for you.

As well, school-based bursaries are awarded simply on a first-come, first-serve basis to those in need. Large Canadian universities will provide bursary support to those who are struggling throughout the year, but you have to apply, and you may have to show why you need the money more than others. Contact Financial Services at your university to make the connections you need.

Set up an emergency fund
Just like those who have full-time jobs, students also need to set aside some money for emergencies. This can help them modulate their debt, and ensure that they don’t have to call on their parents at the last minute to pay their hydro bill.

The Wealthy Barber says that putting aside ten per cent of your income is a good start. If this is the first time a student has set up a savings account, they may want to look into all of the options available, such as higher-interest online savings systems.

The credit card crunch
Colleges and universities always have booths from credit-card companies willing to hand over new accounts to students. Spending through the credit card can, however, be problematic if planning ahead is an issue. Budgeting needs to match spending, no matter what payment process you use.

It is possible for students to build up credit in a positive way as long as they make a commitment to paying off their balance every month. Having no credit is almost the same as having bad credit, so using a credit card wisely can be a boon.