College Students: Are You Spending Money Wisely at University?

Generous college loans and credit cards can hurt more than they help if you blow all your money on entertainment, fast food, and shopping during the school year. But you can make the most of your college years without breaking the bank by following some simple steps.

Student budgeting made easy

As tedious as it may seem, you need to set up a budget. A budget gives you an idea of how much money is coming in, how much is going out, and where it’s going. It lets you plan ahead for the big purchases in a school year (tuition, textbooks, rent) and decide what you can and can’t afford.

If setting up a budget seems overwhelming, check out the Royal Bank of Canada’s online student budget calculator. Just fill in your income (loans, scholarships, wages earned, money from parents...) and expenses (food, rent, tuition...). The calculator will display your cash flow and give you advice on your results. If you’re sharing living expenses with roommates, TD Canada Trust offers a Facebook application called Split It which notifies everyone of how much they owe and when payments are due.

Where to spend student money first: the essentials

The RBC recommends paying for as many essential purchases as you can at the beginning of each semester, such as tuition, textbooks and rent. For monthly payments on necessary expenses like transit, internet, and telephone, set up automatic deductions. Just because it’s automatic, don’t forget that the money is coming out of your pocket! Refer to your budget so you have an idea of how much money is left over for student entertainment.

Enjoying college on a student budget: the extras

Being financially responsible doesn’t doom you to nights of staying in your room and making your own soap by candlelight. University towns and their campuses have lots of great deals for you and your friends. Read the student newspaper and local alternative newspaper to find cheap or free movie nights, concerts, and festivals.

If you check your tuition statement, you’ll see that you’ve paid for more than just courses. Your money is also going towards things like the campus athletic centre, health centre, and various student groups and activities. Take advantage of these services that you’ve already paid for. It’s also a great way to meet other students.

Shopping with student money

Fortunately, the retail world is flush with student discounts. If you have a student discount card from your university, use it. Check out the Canadian Federation of Students’ Studentsaver website for a list of merchants that accept the Studentsaver card. Even if a store doesn’t advertise a student discount, ask anyway.

Remember that clothing stores focus on selling for the upcoming season, and quickly push the same season’s clothes on to the clearance racks. Shopping in season can make a big difference to your clothing budget. Fall sweaters and boots cost less in mid-October than they do during the late August back-to-school shopping season.

A cell phone is another popular purchase, and one that can seriously eat into your budget. Know how much usage you will require – this includes any web-based cell phone applications which use your phone’s data service. Carefully compare different plans, and ask about student deals. Make sure you understand everything before signing a multi-year contract! If you don’t gab on your phone all that much, consider a no-frills service that’s charges a flat fee per minute no matter where or what time you make a call. Only paying for the minutes you use can save you a lot of money each month.

One last student finance tip: Use common sense

Ever heard the expression, "Penny wise, pound foolish"? The RBC calls this behaviour a "false economy." It’s when you cut your grocery bill to $25 a week, and then spend $75 eating at restaurants after you run out of food at home. Or when you save $100 by not buying a bus pass, but then spend $165 over the month buying individual bus tickets at $2.75 each.

Before you skip a big purchase, crunch the numbers and see how much the alternative will add up to. Developing this financial common sense will keep your credit in good shape for now and, like your education, will prepare you for a brighter future.