Financial responsibility is often a new concept to children and grandchildren going to college and university and living on their own for the first time. Without parents and grandparents supporting you, learning to live within your means can be a challenge. The RaeLipksie Partnership has rounded up the top five tips for children and grandchildren heading off to university here:
- Build a realistic budget.
It’s easier said than done, but keeping a budget ensures students will be accountable for their spending. Budgets can also help them avoid overspending. Always start with fixed, non-negotiable expenses, such as tuition, rent and groceries, and see how much you have left over. Next, calculate how much you’ll need for one-time purchases at the beginning of the semester, like dorm supplies and books. Whatever is left over can be allocated to entertainment.
An effective way for students to keep track of their spending and avoid overspending is to use apps such as Mint, BudgetBoss and LearnVest. Supporting the development of good habits and awareness will make saving that much easier.
- Open a chequing account with a debit card.
Similar to setting a realistic budget for yourself, using a debit card allows you to only spend what you have. This results in more accurate budgeting and ensures you won’t end up with high debt, unlike a credit card. It’s important to understand how your bank processes transactions and sign up for overdraft fee protection if you can, for the ‘just-in-case’ moments that may arise.
- Take advantage of your student ID.
Many colleges and universities offer perks for students through their ID cards. Having your student ID tied to discounts at local and on-campus stores and restaurants is a great way to spend less on items you’re already likely to buy, such as books or lunch.
- Choose a credit card wisely.
When you find yourself in an emergency situation, it can be really handy to have a credit card. Credit cards are also a great way to pay off a purchase over a month or two when you don’t have access to all of the necessary funds at once.
That said, it’s vital to do your research before signing up for a credit card. Pick the card that has the best offers for your financial situation – whether it’s a low or no-interest rate for a year or a perks card.
Last, always be sure to pay off at least more than the minimum payment each month. This way you can avoid owing more than the original price of the charges with accrued interest and helps you stick to your original budget.
- Think ahead.
This last tip is geared toward students entering their final year. Post secondary education is one of the biggest investments you will make in your life and most students will graduate with some amount of student loan debt.
While college and university will introduce you to many new experiences, opportunities and people – it doesn’t need to also include extravagant spending. Students with basic financial knowledge who take their finances seriously can carry these vital saving skills throughout their lives.
Next Steps
If you’re a client, contact your portfolio manager and let them know about your saving and budgeting goals. If you want to learn more about working with us for financial planning as your children and grandchildren prepare to leave for university and college, contact us.
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