Three steps to fi­nan­cial adult­hood for stu­dents

Heed cau­tion with those tight bud­gets

Metro Canada (Toronto) - - MONEY & MOVIES - Les­ley-Anne Scorgie For Metro Les­ley-Anne Scorgie is a per­sonal fi­nance expert and au­thor

Your stu­dent bud­get is be­yond tight; books, tu­ition, lab fees, res­i­dence, food, cell­phone, in­ter­net, beer, par­ties and travel. But, if you don’t want to live on your par­ents’ couch when you grad­u­ate, you’re go­ing to have to grow up fi­nan­cially.

Use your smart phone to bud­get

You’re dig­i­tally savvy, right? Take ad­van­tage of bud­get­ing apps like Mint and YNAB (You Need a Bud­get). These apps are free, they’re easy to use and, wow, do they ever bring aware­ness of just how much you’re spend­ing.

You can set up bud­get no­ti­fi­ca­tions so that you’ll get pinged when you’re close to reach­ing the max­i­mum limit that you set for things like gro­ceries or en­ter­tain­ment.

The key with bud­get­ing is to know your fi­nan­cial lim­its and stay within those. In other words, spend less than you make and you won’t have to carry a bal­ance on your credit card.

Keep re­ceipts

Paper and dig­i­tal re­ceipts are worth money when fil­ing your in­come taxes. That’s be­cause re­ceipts are the proof you’ll need to show the gov­ern­ment you qual­ify for var­i­ous stu­dent tax cred­its or ben­e­fits; and that means more money for you! Sadly, the gov­ern­ment won’t trust your words alone.

So, stay or­ga­nized by keep­ing re­ceipts for any do­na­tions, tu­ition fees, med­i­cal ex­penses or re­ceipts re­lated to a side hus­tle (that’s when you earn money from a part­time job).

Use good debt and avoid bad debt

Re­cent statis­tics from Ip­sos & Knowl­edge First Fi­nan­cial in­di­cated that most par­ents aren’t pre­pared to pay the full cost of post-sec­ondary ed­u­ca­tion through RESP sav­ings. If this is your sit­u­a­tion, you’ll be turn­ing to debt and could be RE-turn­ing to live at home once you’re fin­ished univer­sity.

Credit card bal­ances are the ab­so­lute worst form of debt you can use to fi­nance your liv­ing and ed­u­ca­tion costs and that’s be­cause the in­ter­est rates are up­wards of 19 per cent. So, credit cards should be your last re­sort.

Low-rate stu­dent lines of credit along with fed­eral and provincial stu­dent loans are a much bet­ter op­tion. They’ve got lower rates and flex­i­ble re­pay­ment plans. In fact, you’ll even have a grace pe­riod to start re­pay­ing these loans af­ter grad­u­a­tion. There­fore, these tools are a bet­ter op­tion when bor­row­ing.

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Know­ing the dif­fer­ence be­tween good debt and bad debt is key for stu­dents, writes Les­leyAnne Scorgie. Credit cards should be your last re­sort.

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