Don't be a dummy, budget your money

Between student loans, savings from your part-time job and, if you're lucky, some monetary contribution from your parents, you might have a few thousand dollars in your bank account right now. Managing your income from the beginning of the year will help you ensure you still have money for food (and a bit of fun) by the end of the year. “It's important for (students) to manage their income … so that they can feel confident and assured that they have a plan to meet their weekly/daily expense needs,” said Jiuliano Ciardelli, Greater Hamilton district vice-president of TD Canada Trust.

Thinking about the long-term consequences of a fancy night out or a shopping spree will also help put things into perspective. “You're going to end up graduating and walking away with a large balance owing on your line of credit or with a lot of debt,” said Ryan Van de Laar, financial advisor at CIBC. He recommended thinking ahead to after graduation: many student loans take around a decade to pay off, so take what you expect to earn at your first job and look at how much the loan repayment eats up of your paycheque. Rather than spending every last cent in your bank account by the end of the year, budgeting your money could leave you with a surplus so you can start paying back your loan sooner.

GET STARTED
When you're first planning your budget, make sure to look at all the money you have as well as any income you may be receiving later.

“You have to know exactly how much money is coming in so you know how much money you can spend,” said Catherine Bravo, a personal banking officer at Scotiabank.

Once you know the total amount of money you have for the time you're at school, account for your fixed expenses for each month. “Rent is a huge one — you don't want to fall behind on your rent, you don't want to not have a place to live during school,” said Kateri Nantais, a Fanshawe alumnus who currently works as a personal banking officer trainee at Scotiabank. “Go back to your necessities … Your utilities and your groceries and things like that come first.”

After that, look at your discretionary spending. “I call them ‘luxury items,' because they really are,” she continued. If your luxury is something that costs a few dollars a day — a fancy coffee every morning, for example — don't just consider it pocket change and forget about it; that daily expense will add up. “If you know you're going to be spending it, account for it.”

One really easy way to figure out your budget is to check out Scotiabank's Student Budget Calculator (ssbc.scotiabank.com) — you don't even need to be a Scotiabank client to use it. Fill out information about your program, then input your expenses and income for your period of study. “I always recommend to overestimate your expenses, underestimate your income,” said Nantais. “Then you'll always end up ahead.” The site calculates how much money you'll need to complete your program and gives money management tips.

STICK TO THE PLAN
Now that you know where your money's going and you've allocated a set amount for each month, it's time to figure out a strategy to stick to your budget.

Nantais suggested using cash rather than plastic when making purchases. Take out a set amount of cash and only spend that — don't use debit or credit cards, because it's too easy to swipe your card and forget about it. Bravo suggested using jars with set amounts of cash in them each month for each category of spending: groceries, clothing, gifts, entertainment and so on.

Whether you use cash, jars or another method, the important thing is to have a plan that works for you. “If you don't know what your plan is, you're obviously not going to follow it,” said Nantais.

The next thing to do is to keep track of where your money's going. Van de Laar suggested using apps to track your expenses. Some banks, including CIBC, offer mobile banking apps you can use on your smartphone to keep track of your spending. If your bank doesn't offer an app, Van de Laar recommended Mint.com, which you can access on a computer or on your smartphone. It links to your bank account and tracks your statements in a convenient and easy-to-read format. If you prefer to track things yourself, Van de Laar said he uses a spreadsheet to categorize his expenses (debt, rent, transportation, etc.) to track where his money's going.

However you do it, it's important to stay up to date about your money. If you've deviated away from your budget, figure out how much you've overspent — you may have to sacrifice a week or two of fun to get back on track.

GET HELP
The best way to deal with problems is to avoid them altogether by planning ahead, said Ciardelli. “People sometimes wait until it's too late. Part of (making) a budget is anticipating needs in the future, having a safety net, and doing that before the school year starts.” But no matter how much students plan, some may find themselves running out of money halfway through the year. When that happens, talking to someone from your bank can help you figure out the best course of action, whether it's opening a student line of credit, tapping into your Registered Education Savings Plan or getting a bank loan.

If you do end up needing a loan, you need to do your research first, according to Van de Laar. “It's a lot easier to come to your bank and ask for money if you know how much you need ... It would be kind of foolish to ask us for $10,000 when you only need $5,000. That's what a budget kind of confirms: if you do need assistance, you can really lay out exactly how much you need and not borrow any more than what you need so you're not overburdened with debt once you graduate.”

BE CAREFUL WITH CREDIT CARDS
Desperate times can lead to desperate measures, and for some students, that means turning to credit cards. Nantais explained that many people mistakenly believe they should carry their debt on their credit card, which has a much higher interest rate than other types of credit, meaning you'll pay more for your purchases in the long run. “What we recommend is a spend and lend strategy,” she said. For example, if a student wants a credit card with a $5,000 limit, she instead recommends they get a credit card (that carries a high interest but has a perk, such as Scene points or cash back) with a $2,000 limit and a line of credit with a $3,000 limit (and a lower interest rate). In a situation where you don't have the cash to make a purchase, you pay at the register with your credit card, which scores you the points, and you pay your credit card off right away with your line of credit.

Credit cards are easy to use in the moment, but can have serious longterm consequences, said Bravo. “The thing about credit rating is that it's so easy for it to go down south, but it's so much harder to get it back up.” Many different factors are considered when scoring credit, such as the amount of debt the person is carrying, how often he or she makes payments and how often payments are missed. “It takes a lot of discipline to make sure that it's in good standing.”

The bottom line, Bravo said, is, “if you don't have the money in your chequing account to purchase whatever item, then it's not smart to just put it on your credit card — it means you're living beyond your means.”

BUDGET TODAY FOR A BRIGHTER FUTURE
In short, “The budget is the foundation of your overall financial plan,” said Nantais. “If you don't have a budget, you don't know where your money's going, you don't know where you're going.”

Your budget is one of the most important things you'll ever plan, added Van de Laar. “What you do today with a budget will have longterm effects. It will echo through the rest of your life.”

BEING A STUDENT HAS ITS PERKS

Did you know you can save some cash just by showing your student ID? Flash your student card at these stores to get extra-special discounts.

TUESDAY

Loblaws
3040 Wonderland Rd. S.,
1740 Richmond St. N.
10 per cent off

Real Canadian Superstore
825 Oxford St. E.,
1205 Oxford St. W.
10 per cent off

WEDNESDAY

Bulk Barn
1070 Wellington Rd.
1920 Dundas St. E.
50 North Centre Rd.
1965 Hyde Park Rd.
10 per cent off

Value Village
4465 Wellington Rd. S.
1500 Dundas St.
20 per cent off

EVERY DAY

Banana Republic
Masonville Place (1680 Richmond St.)
15 per cent off

Palasad
777 Adelaide St. N.
141 Pine Valley Blvd.
Go online to palasad.com to get exclusive student coupons

Talize
1345 Huron St.
10 per cent off

Student Price Card (SPC)
Purchased at participating stores or online (spccard.ca) for $9
Gives students discounts at participating stores

ONLINE

The web also has many student discounts to offer — visit giftcardgranny.com/blog/student-discounts for online deals on popular brands like Sony, HP, Apple, Adobe and more.

— with files from Lindsay Roche