Financial Steps Every Student Should Take
Navigating university life comes with its thrills and challenges, and one of the biggest hurdles we face as students in Canada is managing our finances. It’s not just about scraping by; it’s about setting yourself up for success beyond the lecture halls and libraries.
I am a Neuroscience Undergraduate student at York University. I put myself through school, which means taking care of tuition, transportation and social costs that come with it (if you are a student, you’d know). All this is possible thanks to my part time job as a cashier, tutoring and a couple cents from writing these pieces and the things I learned along the way.
This last tax year, my tuition alone was over $8000 and I paid around $5000 from my pocket, keep reading to find out what happened to the rest. And I managed to invest a little over $1000. This was without being entirely frugal I must admit. And what I mean by that is, it is definitely achievable with the right resources and mindset.
I know many students out there have additional expenses like rents and groceries that I don’t as my parents have kindly allowed me to stay in their rental stay. I have a lot of respect and admiration for those of you handling things on your own! I hope there is something in here that will help you and I hope I can learn from you too.
For those of you who are in my position, I believe I can offer more insights to you. If your goal is to gain more independence and not rely on your parents so much, consider following as there will be more articles on the matter coming up.
Budgeting 101
Understanding your cash flow is critical. Start by mapping out your income — be it from part-time gigs, internships, scholarships, or family support. Then, list your expenses, including tuition, books, rent, and the all-important coffee fund. The Government of Canada offers a free Budget Planner tool that’s particularly helpful (Budget Planner), or you can opt for apps like Mint or YNAB, which sync up with your financial accounts to make tracking easier.
Saving Strategies
In the words of Warren Buffet, “Do not save what is left after spending, but spend what is left after saving.” Even as a student, you can harness the power of compound interest. Start with whatever amount you can in a high-interest savings account. And don’t overlook a Tax-Free Savings Account (TFSA), which can be a formidable tool for tax-free growth. For more info, the Canada Revenue Agency has an excellent resource on TFSAs (CRA — TFSAs).
Managing Debt
Student loans are common, but they’re not the only way. In my experience, the OSAP wasn’t an option due to my parents’ higher combined income. Instead, I had to look at a student line of credit. Getting this line of credit required a cosigner and a sit-down with a financial advisor at my bank to determine how much I could borrow based on my part-time job and credit history. The Financial Consumer Agency of Canada provides clear guidance on understanding different types of credit (FCAC — Credit). Remember, it’s vital to understand the terms of repayment and to use credit responsibly to prevent overwhelming debt after graduation.
Planning for Post-Graduation
Your post-university life may seem distant, but it’s closer than you think. Start planning for it financially by anticipating expenses and considering how you’ll transition from student finances to a full-fledged budget that may include rent, groceries, savings, and more. The Canadian Bankers Association offers resources to help with this planning phase (CBA — Your Money).
Investing for the Future
Now, let’s talk about growing your wealth. Investing may seem like a game for the well-established, but in reality, it’s also a crucial step for students who want to get a head start on their finances. Enter Wealthsimple — an intuitive, user-friendly platform that demystifies investing for beginners. It’s designed to make investing in stocks and ETFs accessible, regardless of your financial savvy or account balance.
Last week I also did my taxes with them so I highly recommend and I have been on here for the past year and I don’t think I’ll be leaving anytime soon.
And here’s a sweet deal — if you sign up for Wealthsimple using my referral code: XMJUJW we both get $25 when you make a deposit. It’s a win-win: you start your investing journey, and we both get a little boost to our investment funds. Keep in mind that investing involves risks, and it’s important to do your research. I will be writing more articles on how I got started with such little funds soon.
Final Thoughts
Your financial well-being is just as crucial as your academic success. By taking charge of your finances now, you’re paving the way for a stable and bright future. So, embrace the budgeting, make those smart saving moves, and approach debt with a strategy. Your future self will thank you.
Further Resources
These links were hyper-linked but in case you missed it or want it all in one place, here you go:
- Government of Canada Budget Planner: https://itools-ioutils.fcac-acfc.gc.ca/BP-PB/budget-planner
- Canada Revenue Agency — TFSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account.html
- Financial Consumer Agency of Canada — Credit: https://www.canada.ca/en/financial-consumer-agency/services/credit.html
- Canadian Bankers Association — Your Money: http://www.yourmoney.cba.ca
- $25 from Wealthsimple with the code XMJUJW: https://www.wealthsimple.com/invite
