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Advice for undergrads on how to lock down an “A” in money management

Student debt can quickly escalate in a number of different ways, like dipping into the semester’s food budget for a Spring Break vacation or withdrawing cash from a credit card to pay the rent. 

According to research from TD Canada Trust, 38 per cent of undergraduate students wished they had stuck to a budget during school, and 43 per cent said they wished they had curbed spending on discretionary items like nights out with friends, gadgets and coffee. Quick-fix approaches to spending can have implications that linger for decades, so it is essential that freshman put their best financial foot forward from day one. 

“University is full of tempting opportunities to spend money, which is why it is so important for students to create a budget and learn when and how to say ‘no’ to things they cannot afford,” said Raymond Chun, a Senior Vice President at TD Canada Trust. “With the average cost of an undergraduate degree currently estimated at $84,000, it is imperative that students do their homework on how to manage everyday finances, stretch their student dollars and avoid excessive debt.”

To help post-secondary students make the grade in money management, Chun provides advice on how to avoid the top three freshman fiscal missteps: 

  1. Earning a failing mark on a credit rating. It can be challenging to juggle studies, extracurricular activities and social engagements while keeping track of financial obligations, like paying bills on time. A missed payment could have a negative impact on a credit rating, impacting the ability to borrow money to buy a car or a home in the future.

    “Always pay bills on time and in full and consider setting up automatic bill payments online for regular expenses,” said Chun. “Remember, even if a cell phone provider gives you an extension on a bill, your credit rating may still show that it was paid late.”


  2.  Treat a credit card like a debit card. 31per cent of  students wished they had used their credit card more responsibly at school. A credit card is a practical tool to purchase books and school supplies. It can even provide you with the opportunity to save money by offering additional benefits like no annual fee, the ability to earn rewards and insurance coverages. Still, Chun warns students to only use credit cards if they are sure that they can pay off the balance in full when the monthly statement arrives.

    “Credit cards essentially offer customers an interest-free loan on new purchases for 21 days, but only if the balance is paid in full by the payment due date,” Chun said. “If payment of the full amount is made even one day later, the cardholder will be charged interest on those purchases from the day they were posted to the account.”

    Although tempting, making a cash advance from your credit card account is not always a good idea since it incurs interest from the moment the transaction is complete.


  3. Spend with a plan. Studying away from home is full of tempting opportunities and too much discretionary spending can derail even the best budget intentions. To get a clear picture of how flexible the budget is, list the money coming in from scholarships, work, family and student loans. Then, subtract essential expenses like tuition fees, books and living expenses. If the balance is negative, rethink unessential expenses or look for alternative funding options for school.  

    “One of the easiest ways to avoid overspending is to organize your finances,” said Chun.

    “Take advantage of past on-line statements to assess current spending habits. That history can help identify potential saving opportunities and build a realistic budget you can stick to.” 

Posted: Sep 5, 2013

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