#FinancialFridays: Money Matters (and Marshmallows) for Post-Secondary Students.

If you are a student going to post-secondary, Congratulations! This is such an exciting time for you. It is a time to grow and learn and explore… not just in the classroom. You can also take this opportunity to learn about and practice managing money. You can treat learning about money as an important subject, like your favourite subjects in school.

Here are some of the topics you should learn about this subject.

  1. Know what you have to work with
    Knowing how much money you have and what your expenses are going to be is part of preparing and studying. Sit down in the library or somewhere quiet, like you would to study for a class. Write down all sources of income, whether it is money from a part-time job, savings, RESP funds, a student loan, or help from family. Write the amount and when you will receive it. Are there any rules about how you can use it?
  2. Know your responsibilities
    The next thing is to know your expenses, your responsibilities. Write down all of your expenses, from large, like tuition, to small, like laundry. Again, what are the amounts (even estimates will help) and when are these costs due or when will you need to pay them. Is it a one time cost or a recurring cost. You can use a calendar to help. There are costs and consequences to not paying your expenses on time. Some planning will help you to manage your expenses and avoid the consequences.
  3. Learn how student loans work
    Learn about the ins and outs of repaying a student loan. Most schools have departments and staff dedicated to helping you with student loans. If you are using a student loan through a bank, they have staff who can help you as well. This includes answering your questions and giving you information. The rules for student loans can be complicated and can change. It is your responsibility to meet your obligations for your student loan; Use the resources and people available to you to learn what you need to know!
  4. Wait to eat your marshmallow.
    Learn an important lesson from these kids! Watch this video – “The Marshmallow Test” by the Globe and Mail.
    The Marshmallow Test teaches us about delayed gratification, resisting getting something you want now to get a more valued thing in the future. There is a cost to getting everything you want right away. If you are using credit, like a credit card, you are paying interest for that thing, which means you are paying more than you initially thought for the item. When we delay getting things right now, it gives us time to make sure we really want and value that thing, and it gives us time to make sure there is room in our budget or save for that thing. This helps us avoid getting into debt for things we don’t actually value or adding to debt that we can’t manage. It is a really important lesson to learn to help avoid financial stress in the future.
    Look at your list of expenses. Which items are needs and which are wants?
    Needs – Something you cannot survive without, ie. food, water, shelter
    Wants – Something you can live without. These can be high level wants, like paying tuition, and lower level wants, like Subway for lunch. What are the consequences of that item not being paid for or not having that item?
    Add a few things you want but may not need to the list. Prioritize the items on your list, needs first and wants afterwards. Which ones can you wait to have? Can you save for them? These are all important questions to answer.
  5. Learn about credit before you use it.
    You need to be at least 18 years old to get a credit card, which means this is the time most people start to learn about credit. Credit card companies do encourage and make it easy for students to get a credit card. This doesn’t necessarily mean you should right away. With a credit card, you make purchases and you have a window of time to pay that amount down before you will be charged interest. This is not free money; You are paying (in the form of fees and interest) to borrow the credit card company’s money to get something now. If you do not repay that money within the window to time, you will be charged interest on that money.
    If you are planning to get a credit card, take some time to learn about it first. This will help you make a decision that works for you. Different credit cards have different rules and benefits, so shop around. What is the interest rate? What is the window of time you have to pay the amount before being charged interest? What are the benefits of using the credit instead of cash or debt? This may include points you can use at a certain store. Do you actually shop at that store? Are these benefits beneficial to you? Once you know the rules around the different credit cards, then make a decision that works for you. This may be to apply for a specific credit card or put off getting a credit card.
    If you do get a credit card, put an alarm in your phone a few days before your window to pay each month so you can pay it in full or as much as possible before interest starts. It does sometimes take a few days for your payments to be processed.
  6. Find ways to save money while in school
    Whatever money you can save or expense you can lower will help in the short-term and long-term. This may include buying used textbooks, sharing textbooks, or borrowing textbooks from the library, working on campus, applying for scholarships and bursaries (many bursaries go uncollected because people don’t apply for them), and using your student discount card whenever possible.

This is a learning process so it will take planning, study, and time. Managing money is a daily activity throughout your life, so learning it now will help you in your future.