By Jasmin Brown

BDO Debt Solutions

Post-Secondary Students and Back-to-School Finances

Aug 31, 2021 | 12:50 PM

When we think about back-to-school, we tend to think about the younger generation attending elementary and high-school. But what about those students heading off to pursue their post-secondary education? For many of them, this will be their first time living on their own and their first taste of freedom. It is a very exciting time for those students, but there are some very important considerations in terms of finances and money management so that students don’t look back at obtaining their education with regret.

Recent polls are telling us that many college and university students are struggling with financial stress, preparing and working with a budget, paying tuition, and managing their living expenses. What this means is that this is a crucial time for parents to sit down and have the money talk with their children – before sending them off to school. Central to the money talk should be a conversation around budgeting.

Creating the Post-Secondary Budget

When creating your post-secondary budget, you will want to consider the following:

· What is available to spend – this could be student loans, grants, scholarships, income from a job etc. Consider how long these funds have to last.

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· What costs do you have – this could be tuition, books, residency, student fees, meals, etc. Start by determining the necessities.

· What expenses should have a weekly cap – this could be entertainment, takeout, nights out, movies, etc. You may not be able to afford to do it all.

· What are the needs vs. wants – this is an extremely important distinction to make when creating any budget.

To get the most out of a budget, it has to be reviewed regularly and used to track spending. It is not something that should be created and then not looked at again. It needs to be an active tool used to manage finances.

Using Credit Wisely

Credit card providers will undoubtedly be on campus, and it will be easy for students to obtain credit. A credit card is not necessarily a bad thing and can have benefits if it is used properly:

· It can be used to build your credit history;

· It can be a way to earn reward points;

· It can assist with cash flow to get from one period to the next;

· It can offer consumer protection – extended warranties on purchase or rental car or travel insurance.

Credit can have the total opposite effect and be quite damaging if it is not used properly. To properly manage your credit card:

· Pay off your balance in full each month;

· Don’t be late with any payments;

· Don’t go over your available credit limit;

· Don’t use your card to withdraw cash.

Debt Regret

Getting a post-secondary education can be very expensive. A post-secondary undergraduate student today will have an average debt load of $28,000. That amount increases significantly with any type of specialty. In a BDO poll conducted in 2017, 77% of graduates under 40 expressed having student debt regret. They wished they had lived more frugally, taken on lower student debt, and avoided other types of debt while attending school.

It is so important for parents to have discussions with their children about debt and management of finances. While student debt can be good debt, it does still need to be paid back. The sooner a student starts thinking about that, the better it will be for them in the long run. Using credit wisely today will keep students from experiencing debt regret later on.

If you are having trouble making ends meet each month, finding the right debt solution can help. Visit the BDO Debt Solutions website for more information about bankruptcy, or call 1 855 BDO DEBT to book a free, no obligation consultation.