Money management as a student is a hefty task. Especially when you’re juggling a degree which takes several years to complete.
While juggling assignments, exams, a job (probably), and a social life, the last thing you want is to do is find yourself in the middle of an awkward finance pickle.
We talked to some experts about how university students can manage their money while in school and some common money mistakes they can avoid.
Not having a budget
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Having a budget can help you avoid money mistakes most of the time.
A budget looks different for everyone. It depends on your lifestyle, hobbies, and your interests. A budget for a hiker will look different from someone who considers themselves a gamer or a party animal.
“There is almost nothing you have to do in a certain way. Almost everything can be done in many ways,” said Dr. Lucas Herrenbrueck, an assistant professor of economics at Simon Fraser University.
He suggests that an ideal budget should be the sweet spot between necessities and leisure and should be categorized according to your spending.
When buying expensive items or booking a vacation, there is a difference between “I can afford this now versus I can afford this all the time,” Herrenbrueck explained.
If you have $1,000 saved, then you can afford anything that costs $1,000 but only once.
Relying too much on your credit card
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Depending too much on your credit card can cause a big faux pas in your wallet.
It is best to steer clear of financing your education with your credit cards because of the high interest rates.
There is a massive difference in interest rates between loans and credit cards.
“Stay away from the kind that is convenient, easy to use, and very tempting,” said Dr. Andrey Pavlov, a professor of finance at SFU.
He recommends taking a student loan or starting a line of credit instead of using a credit card to finance your needs.
Herrenbrueck also mentions that actively trying to build your credit score as a student is “not worth your time and not worth your trouble.”
He suggests that if you pay every penny of your credit card debt on time then your credit score will take care of itself.
Living in a home you cannot afford
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You may not be able to cut from the tuition budget but you can be creative with your housing, suggests Pavlov.
Having your own apartment sounds amazing but sharing a house with a group of people can help you save on rent and in turn, also help you find great friends. This option is great for those who cannot afford on-campus housing and can commute to school from further away.
Saving money as a student
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Saving money in addition to your everyday expenses as a student can be a herculean task.
“If you’re a student and you are managing to stay afloat without incurring too much additional debt, you’re doing very, very well,” said Pavlov.
He does not recommend adding the task of saving money on top of that and said that it should occur when you have a job and are working full time.
However, if you do want to save for a short-term goal like your tuition payment or your rent, Herrenbrueck recommends putting small amounts in a Guaranteed Income Certificate (GIC) regularly.
Investing money
One big rule of investing, according to Herrenbrueck, is “Don’t try to get rich quick.”
He explained that following your friend’s steps on a “cool new scheme” they made a lot of money with may not work for you.
“It’s nice that your roommate got rich with crypto. It may not be you,” he said.
Pavlov also does not recommend investing money as a student and says that the main goal is to invest in yourself and in improving your skills.
However, if you do want to invest, he suggests not investing in assets that “everyone is jumping up and down” from and are stable.
Not using your degree to the full extent
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It is important to make sure what you learn in school can get you a job in the real world, according to Pavlov.
“It could be a mistake to study things that don’t necessarily help you in the job market,” he added.
You may want to prioritize taking courses that are in high demand in the industry and then take courses you would like to learn.
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- Looking for a place to live in Vancouver? Here are 10 ways to avoid a rental scam
Thinking too much about money
There is no financial problem that cannot be solved by taking some time for yourself and planning out your game plan.
Herrenbrueck recommends giving yourself at least four hours or four one-hour blocks to plan out your short-term and long-term financial goals in a month.
But he also recommends taking a step back and forgetting about it till the next time you schedule your money-time.
“Don’t not think about money but don’t always think about money,” said Herrenbrueck.
Are there any money mistakes you avoid? Let us know in the comments