Financial Literacy

Heading to college or university can be an exciting experience. With that experience comes many firsts; first time living away from home, having a roommate, buying groceries, getting a loan and managing money. Getting a student loan and managing money can be a big adjustment- one that can provoke stress and anxiety. Like buying school supplies, dorm room decor and stock piling goodies from Mom, getting your finances in order before heading off to college or university should be a key part of your preparation.

Perhaps you have earned some money over the summer and have been saving to further your education. Scholarships, bursaries and part-time jobs can help cover costs, but government student loans and grants remain the main source of funds for many Canadian students.

The average undergraduate tuition in Canada rose to $6,373 for the 2016-17 academic year, with the province of Ontario leading the way at $8,114. – Globe and Mail

student loan

Whatever your situation is, take some time now to prepare for the months ahead.

Consider these money tips to help make your earned money and student loan last the full school year.

Calculate your funds available – After you apply for a student loan, you will receive a notice stating your allocated student loan amount. Determine what your tuition will be for coming term or year and calculate what money you will have remaining after tuition is paid. Take into consideration the cost of books and supplies and subtract that amount.

Set aside an emergency reserve that you can use if something unplanned happens. A small amount can go a long way if you run out of food or you need to get home to see family. What you have left is for your living expenses and needs to last the whole term or school year. Part-time earnings may supplement your funds but otherwise you need to make the money last. The remaining balance is better off in a savings account where you will not be tempted to spend it.

Determine a monthly amount – Divide the remaining balance, or a portion of it, by the number of months (e.g. 4 for September to December term or 8 for September to April). This is your monthly spending allowance. You should transfer this amount to a chequing account at the beginning of each month as your monthly allowance. Remember, you are not obligated to spend the full amount of your student loan.

Consider your expenses– Take into account housing, transportation, telephone, Internet, food, toiletries, eating out, entertainment, any other expenses that you might encounter. Establish a weekly or monthly amount for every possible expense. Use cash for your variable expenses, it is easier to see how much you have left as credit or debit slips from vendors don’t provide your account balance. This should make it easier to stick to your plan.

No experience in making a budget? Our member, the Credit Counselling Society can help. Access their free downloadable student budget calculator worksheet for Excel.

”Government loans and grants can certainly help finance an education, but the problem is students often do not keep track of smaller expenses – such as entertainment, hair cuts, clothing, and coffees – that can add up. What often happens is that they run out of money before the end of the semester.” Patricia White, Executive Director of Credit Counselling Canada – Globe and Mail


Set up a tracking system – There are many ways to tracking systems from receipts, notebooks and excel spreadsheet to cell phone apps. Find what works best for you. Be aware that miscellaneous expenses might quickly add up with coffee, clothes and assorted other items that should have their own category if they happen several times in a month. If this happens you might need to revise your tracking system and add additional rows or categories for these expenses.

Keep track of every expense –  Regardless of what tracking system you are using, the main thing is that you dedicate a few minutes every day to record all your spending. Make it a habit. After a couple of months you will begin to see a pattern to your spending and ensure that you are staying within your plan.

Revisions may be necessary – Make changes to your monthly spending amounts if you exceed your original monthly allotments. You may need to reduce some other expenses if you find that your necessities are costing more than you estimated. Continue tracking to ensure that you are not spending more than you have.

Avoid credit – Credit is not available money for you to spend. It will limit your income with interest charges and reduce your next month’s allotment particularly for expenses that are not planned. Stick to your plan without using a credit card.

Remember, you are responsible for your student loan. This may be your first real opportunity to prove yourself as a borrower. Make sure the documentation is kept safe and secure; consider keeping a photocopy with you and safely store the original document at home. Before you leave home set up a file or folder to store your important information. Read over your student loan document and ask any questions before signing the document and know when you will have to start repaying your student loan.

Lastly, don’t be afraid to ask someone for help. Your campus will likely have a student financial aid office and professionals who can help you. And, you can always reach out to a member of Credit Counselling Canada for assistance or access their many free online financial literacy tools.

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