4 Ways to Help Your First-Year Student Stay Debt FreeJul 05, 2018
The truth is, many high school graduates feel financially unprepared. Not just because money is tight, tuition is high and living costs can break the bank, but because they don’t feel financially literate. All of that can add up to major debt during post secondary.
For parents, there’s a lot of ground to cover before sending your kids off to school in the fall. Campus tours, living accommodations, transportation needs, and their children’s safety on and off campus are just some of the topics parents are tackling.
Before your child begins the school year, carve out some time to talk to them about how their financial reality is changing, too.
For a lot of new students, university signals the beginning of a many firsts. Financially, that can be a bit overwhelming. Besides the obvious financial strains of university, the temptations of consumer debt are everywhere. With costs high and interest rates even higher, it doesn’t take long for debt to add up.
Here are four tips to help your first-year university student get off on the right foot, and stay financially fit through their university years.
- Learn to follow a budget
For young adults on their own for the first time, the speed at which they can spend their money is often shocking to them. By the time it’s all gone, it can be hard to remember what they did or bought…lattes and lunches add up, and consumer debt is very often the culprit of overspending.
But if your child can learn to follow a budget honestly and consistently, they’ll see where their money is going and be able to curb their consumer debt.
Budgeting is easier now than it has ever been because there are a ton of varied budget formats to suit different lifestyles and budgeting preferences, as you can see through this Futurfund article on budgeting.
Let your child know that it can take a bit of time to find the perfect budgeting system for them, but sticking to the routine of tracking their money is important. They’ll soon see that they reduce the risk of taking on debt as they find the perfect personalized budget for themselves.
Budgeting is made easy and mobile with Mint’s program.
For semester planners, My Money Coach offers a semester by semester approach budget template so they can plan far ahead.
- Focus on saving money
For a lot of students who can’t work part-time or at all during school, saving money in post secondary is more about depleting their funds more slowly, so their money can go further. Jeannine Mitchell of Student Finance 101 has some creative strategies for saving money like negotiating contracts and fees, taking advantage of student retention programs and opting for used textbooks.
- Stay on top of scholarships, bursaries, and loans
There are a lot of places that offer scholarships, bursaries and grants to students. It can be easy to get overwhelmed applying for them, and some amounts of $100-$500 may seem small at first. But every little bit helps. If you child is studying in province, the Ontario Student Assistance Program can be helpful, too.
Recent grad, Steven Van Sluytman, shares how he graduated debt free on the blog Money We Have.
- Use credit sparingly
Credit cards should always be the exception, not the rule. And lines of credit, while they often have lower interest rates, are subject to interest rate hikes, which can catch borrowers off guard and make it difficult to reduce their debt.
The interest on credit cards is very high. Talk to your child about the pitfalls of credit cards and borrowing. And teach them about credit scores so they can start building a good credit history.
This credit card advice from Maple Money is worth sharing with your child.
Sending your child off to college or university will be full of its own challenges. But knowing that you’re helping them keep debt at bay can help you sleep better at night.