Helping Students Avoid Debt

Being accepted into university, college or grad school is a major milestone and your kids should be advised on how to attend post-secondary without racking up debt.

A study by TD Canada Trust found that more than one-third (38%) of undergraduate students wish they had stuck to a budget while they were in school, and 43% wish they would have spent less on nights out with their friends, electronic gadgets and coffee.

Here are a few pointers to share with your kids as they head back to class on Tuesday;

1.      Make a plan.  Help your student create a budge where he lists out what he needs versus what he wants for school.  If your kids are living away from home for the first time help them figure out how much they can afford to spend each month.

2.      Pay bills on time.  It can be challenging to juggle studies, extracurricular activities and social engagements while keeping track of financial obligations, but it is important to pay their bills on time.  A missed payment could have a negative impact on their credit rating, affecting their ability to borrow after graduation; for something substantial like a car or a home.

3.      Don’t treat a credit card like a debt card.  Nearly one-third of students (31%) wished they had used their credit cards more wisely while they were in school.  Remind your kids to only use their credit cards if they can pay off the balance in full at the end of the month.  Furthermore, taking cash advances from their card is not advisable as the interest starts accumulating the moment the transaction is complete.

4.      Apply for scholarships, grants and bursaries.  Most post-secondary institutions offer a range of scholarships and bursaries to students with financial needs; not just academic or athletic achievements.

5.      Consider loan options.  It is important to consider how long it will take your student to pay back their student loan, and in what increments.  Make sure they consider the interest rate, any repayment grace periods and the loan terms and conditions.

 “University is full of tempting opportunities to spend money, which is why it is so important for students to create a budget and learn when and how to say ‘no’ to things they cannot afford,” says Raymond Chun, of TD Canada Trust.  He adds “With the average cost of undergraduate degree currently estimated at $84,000, it is imperative that students do their homework on how to manage everyday finances, stretch their student dollars and avoid excessive debt.”

It is important to teach our kids to use credit wisely, and build a positive credit history.   Lead by example; show them your own cash flow management plan, if you don’t have one; give me a call.

Have a great long weekend!

Tracey

 

 

 

 

Sources:  Advisor.ca, articles by staff on 08-13-13 and 08-16-13