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Q: I’ve been going to university for almost two years and up until last fall, was working almost full-time along with going to school. My employer closed due to the pandemic and rather than find another job right away, I decided to spend more time on my classes. This worked because I moved back home, where my parents aren’t charging me rent, and I had some savings to fall back on. I thought I’d hate living at home again but I can’t believe how much easier it is to focus on school when life isn’t so busy (but don’t tell my parents!). I’ve lined up some seasonal work starting mid-April, and then from May through to the end of August, I’ll be working there full-time. I should be able to save almost all the money I need for another year at school. What should I do to make my money last a whole year? ~Noah
A: College and university are expensive, and if you need to add living costs to your budget, that can easily add as much as $8,000 or more per semester to what you need to spend to get your education. If you’re able to live at home and chip in your room and board with some help around the house rather than cash, that is worth its weight in gold. The thing is, many students don’t realize this until it’s too late.
It’s only natural when embarking on your post-secondary years to want to get out on your own. Renting a dorm or apartment close to campus, setting (most of) your own rules, coming and going as you please, it all seems very appealing — until the bills start rolling in. Rent, internet, transportation, groceries, utilities like water bills and electricity (if they’re not included with the rent), and everything else that goes with renting a place add up fast. Once you factor in some credit card bills and your cellphone, before you know it you’re calculating how long until you can apply for the next student loan rather than creating a study plan for your mid-terms, papers and finals.
Money management is as much psychological as it is financial, so it’s important to consider both as you look for ways to fund your education a little differently.
A budget will keep you sane
When it comes to managing all of the competing priorities that come with being a student, a budget might be the last thing on your mind. But a budget will keep you from guessing what you can afford to spend. In short, it will keep you sane and give you one less thing to worry about. However, you might be wondering how you can come up with a budget when you don’t get paid regularly. And you’re right, that’s a great question for students and anyone with irregular income.
Student income — whether it’s a lump sum you saved in the summer, scholarships or other financial awards, a gift from a loved one or a semester’s worth of student loan money — most people aren’t cut out to budget with irregular sources of income.
How to budget with irregular income
One of the best ways to budget when your income isn’t doled out on a regular schedule, is to dole it out for yourself on a regular schedule. You can do this by putting any money you get into a separate savings or holding account. Then, based on your budget and how long the money needs to last, you pay yourself a monthly or biweekly amount.
Some months the holding account will have a larger balance; other months it will be much leaner, but the amount you pay into your chequing account does not vary from month to month.
For post-secondary students who are trying to budget with a lump sum of money, the holding account method usually works quite well. It can be much too easy to spend a lot of cash all at once, but by using a holding account and taking out a “paycheque” every two weeks, it’s much easier to make the money last as long as it needs to.
Keep your money safe from yourself
We are sometimes our money’s worst enemy. If we suddenly feel rich because of a big bank balance, it is that much easier to justify our spending. No matter where your tidy sum comes from, take steps to keep it safe from yourself.
● Set up a savings account that is hard to access, e.g., at a financial institution you don’t normally bank at, or limit access to it on your debit card so that you can’t purchase from it in a store.
● Remove bank account, credit card and other payment details from your favourite online retailers, digital wallet services (e.g., Apple Pay, Google Pay or Samsung Pay), electronic payment accounts (e.g., PayPal) or apps that you like to use.
● Use a budget, and after all of your expenses and bills are taken care of, give yourself some spending money to use any way you like. Think of it as a reward for spending wisely, and it makes it easier to stick to your plan if you know you’ve got a little to spend on a splurge.
● Limit how many credit cards you have and keep the ones you do have at home in a safe place. Only take them with you when you have a specific plan for what you need to buy and how much you plan to spend. If you don’t trust yourself with a credit card, ask someone you trust to keep your card safe or lock it in a safety deposit box. You could also contact your credit card company to ask if they can freeze your card for you. That would still allow payments but not purchases.
● Put yourself on a cash diet. This means only buying what you need with cash in hand. Use debit if the stores you shop at prefer not to take cash during the pandemic.
Reframe your goals
When you’re in the midst of what feels like an endlessly long program that’s keeping you from getting on with the rest of your life, take a step back. Consider your goals before you abandon your priorities during a frustrating moment. Take living at home, for instance. When you’re bogged down with papers, exams and tutorials, someone cooking an extra portion of dinner for you or picking up your favourite study snacks can feel like a blessing. But living at home, when you’re asked to help with some chores or to do your laundry on a household schedule, can seem suffocating for someone who wants nothing more than to live their own life.
When you have these feelings, reframe your thoughts to bring your priorities back into the right light. You won’t be in school, living at home, saying no to tempting vacations, or even sharing a car forever. Remember that your current circumstances are temporary. They allow you to spend your time and energy on your bigger goals.
Alternate ways to fund your education
There are ways to secure funds to pay for school without working. Scholarships, bursaries and grants are all sources of non-repayable funds that can be used to pay for tuition, books and sometimes other related educational costs. And they aren’t just open to first-year or graduate-level students; second-, third- and fourth-year students can apply for awards. There are also specific awards for trades, technical and vocational programs. Check with your post-secondary institution’s financial aid and awards office to learn more.
Non-repayable funds are the way to go if you can get them. Spending some extra time on your applications increases your chances of receiving all the awards that you’re eligible for. That’s money you don’t need to repay when your studies are done. And the less you owe, the more quickly you can get on with the rest of your life.
What a frugal student life really buys you
Drastically reducing your expenses so that you can focus on your studies and live a frugal lifestyle means that you can position yourself for success as soon as you’re done school. You won’t be saddled with big student loans and excessive credit card debt as you try to find a job that pays you enough to keep up with all of your payments. If you thought living at home could be suffocating, living under a mountain of debt is much worse.
Reduced expenses mean that you can work less during the term. A shift or two every week or so can then be a break from sitting at your desk, keep your skills and connections active, and also gives you a little extra to pay for life’s incidentals. When you have a lot of expenses and bills to pay, working as much as you can becomes your only — and stressful — option.
A school-facilitated program like a co-op placement can be especially beneficial, but also make sure you understand what you’re signing up for. By working on such a program you not only get experience, you gain valuable insight into your field of study, you earn a paycheque while you’re learning, and you start building a resumé with real-life experience.
The bottom line on managing money when you’re a student
If it’s taken a worldwide pandemic to teach you valuable money skills, those are lessons no amount of formal education will ever be able to teach. Learn from these opportunities, choose your priorities based on what will benefit you in the long run, and adjust your financial choices accordingly. There will be bumps in the road as you work towards your goals, and whether you view them as stepping stones or stumbling blocks, that is entirely up to you.
Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by email , check nomoredebts.org or call 1-888-527-8999.
Copyright Postmedia Network Inc., 2021