‘Reality cheque’: Staying on track of your personal finances

By Eric Reid | Scribe

One thing that every post-secondary student has in common is a tuition bill for the semester and school-related costs. What changes are the dollar amounts that range from programs and specialties to international tuition student fees. No matter the subject, the benefits and stress relief that can come from sitting down and working out a plan for finances can be huge. 

So, why set a budget? And why would it even matter to a student or young person yet. It becomes increasingly important for students working throughout the summer to pay attention to how much they need to save each month in order to pay for expenses in the fall and winter.

During the previous 2021 holiday season, an Ipsos poll completed by RBC bank showed that 33 per cent of Canadians went over the budget that they had set for themselves and overspent an average of $414. This overspending at the end of the year can control how the entire year plays out financially and depending on how you set up the budget, it can allow the year to be relaxing, or quite stressful spending months catching up. 

When paying for education and all the other costs associated with attending post-secondary, spending can dramatically increase and start to interfere with other bills and can quickly become difficult to manage.  Pedro Agurto, a wealth advisor for Scotia Wealth Management in Toronto believes there are many ways to start and navigate the process of sorting out your finances and spending.  

“People that are financially stable always have a good understanding of how money works. The ones that have a retirement have a good understanding of the budget team and how money is working for them. They also know that accumulating wealth is easier if you start early. So, for young people it is very, very important that they learn about finance at a young age,” Agurto said.  

“One of the concerns for students is always limited money in depth. Schools can sometimes offer limited advice on money management, so starting at a young age is ideal for the future,” he said.

An important question that can be asked when organizing is “Where does most of my money go?” 

It can be difficult to keep track of every time you tapped your card for a coffee or made an online purchase for a new shirt. Bank apps now have features that track your spending and allow you to set reminders for yourself to ensure that you’re not overspending. They track what monthly bill payments come out of your account, and when the next one should be scheduled. Consider your monthly spending habits and then what you would like to see change about them. If you are spending $200 a month on clothing right now, consider spending $100 next month and saving the extra hundred dollars towards other expenses.  

“Another way that can be an introduction to organizing your finances and staying on track can be reading different materials. Being patient is extremely important as well. To start, I will recommend first reading books that introduce you to personal finances,” Agurto said. 

Students currently living on their own, with roommates, or are planning to move out soon have likely been noticing the increasing costs of many everyday needs. One of the most noticeable increases is the cost of groceries. In 2021, the annual Canada’s Food Prices report showed that families ended up spending almost $14,000 to feed themselves, while Canada was dealing with the COVID-19 pandemic.  The report was based on a theoretical family of four. Now in 2022, with the inflation of food prices continuing, the report predicts that there will be another increase this year of five to seven per cent, or an extra $966 a year. 

Some of the largest increases in prices at the grocery store were in dairy, bakery, and vegetable products. The Canadian Dairy Commission said dairy prices in 2021 increased by 8.4 per cent from the previous year. Products in stores are also becoming smaller in size while remaining the same price or even increasing.  

Some ways to save money every week at the grocery store include checking the local flyers for sales that week and calculating how much you’ll save. Flyers can be found easily on mobile apps such as Flipp, which allows users to search all the flyers by stores in their location. Another way this can be done is by switching to dupes of a product that you currently use.  Many people during the pandemic became familiar with looking for new ways to make extra income. Crystal Gangaram is a 27-year-old Pickering, Ont. resident with her own small business which she started during the pandemic, called Fruitz & Gria.

Needing various fruits means that she needs to make sure she is getting the best price on the products in order to make a profit. “I check different flyers, I look at Walmart first because it’s closest to me. I just see if they have any specials approved, which they usually do. I also check to see how many orders they have that week. And that’s how I kind of determine how much quantity I should buy,” Gangaram said.

Never missing an opportunity, Gangaram is ready for any sale.

“Okay, so right now I have like a small notebook. And it has different tabs in it. One has profits and expenses,” she said. “I would just put down the date and know what stores I went to buy, whatever it may be and then on the next side, there are purchases and how much it will cost.”

In January, Netflix Canada increased the subscription price by $1.50, another expense that also increased this year. Cutting down to one streaming service might be a realistic decision students could be making in 2022.

It’s a challenging situation when students have had difficulties working the last two years, with many services shut down for long periods of time. Many people were forced to use savings so that they could continue to buy things that they needed and live comfortably. With rising prices of housing and rentals in the Greater Toronto Area market, homeownership in the city is becoming harder. 

Barry Choi is a Toronto based personal finance and travel expert who runs the successful site Money We Have. The site serves as a resource for everything about saving, credit cards, and investing. 

“If you haven’t done so already, track your spending so you know exactly where your money is going. If you still find you’re spending a lot, try to figure out the source of your problems,” he said. 

“For example, some people may get tempted to use their credit cards since they don’t have to pay until later. If that’s the problem, consider taking your credit cards out of your wallet. Budgeting is straight math, but it does take some willpower to maintain.”

Making sure that you set a realistic budget for yourself is the key to ensuring that you will be able to be successful at what you set for your goals. 

“Anyone new to budgeting may want to stick to cash envelopes or cash stuffing. That’s where you literally set aside cash into envelopes for certain expenses. For example, if you budget $100 for entertainment, put that money in an envelope. As you draw down from that fund, you’ll quickly realize that you’ll eventually run out of cash which will force you to cut back on your spending,” Choi said.

It can be a great challenge, but sticking to a realistic budget will pay off in the end. 

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