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I find it incredibly tempting when I receive a large sum of money from OSAP at the beginning of each term to just spend it. After all, it seems like there’s more than enough to cover tuition, so why not?
But before splurging on that beautiful new iPhone 3G S, I talked with Cynthia Bishop (yay for being a name twin!), the Director of Student Life, Career Services and Alumni at Rotman Commerce. And she agrees – she remembers being a student with OSAP loans and being tempted to spend the money too, but she quickly realized that “the lump sum money doesn’t cover any of your miscellaneous expenses, only the necessities”. We talked about how to manage finances as a student, and basically, Cynthia says that it is imperative to plan and track your money.
Planning Your Money
Planning ahead by realistically breaking down your income and expenses for every month will give you a clear picture of your finances. I found a academic year planner here that you can print out and mark. I like it because you can see your entire year on a single sheet of paper.
Everybody is different, with different commitments, expenses and income, so you need to make a plan that’s personal to you. What I do is simply write the amount of money that I will either gain or lose on the planner above, like +50 or -50 in the box. You can even colour code if you’d like. U of T’s Admissions and Awards also have a budgeting sheet on their site, and offers financial counselling.
Although by no means a comprehensive list, here are some things that Cynthia suggests to keep in mind when making your financial plan.
- What is the actual cost of school? Apart from tuition, there are fees and textbooks to think of.
- When are your fixed payments due? Things like rent or transportation that occur on a regular, monthly basis.
- Food. Are you on a meal plan? Do you need to buy groceries regularly?
- What about all the things that don’t come up monthly? Do you have biweekly car payments? Do you cut your hair every two months? Do you need to buy clothes for formal?
- What about gifts? Mark down when your friends’ birthdays are, so that you know to budget for gifts or night outs. Same with weddings and holidays.
- Look at your breaks, reading weeks, etc. Are you going home? Do you want to go on a trip?
- Also, what are the little expenses that you don’t really notice? Do you print or photocopy at school? Do you buy transit tokens every so often?
Now that you know when you need to spend your money, think about all the sources of income that you have or will be receiving (parents, work, etc). Do you actually have enough? Mind, credit cards do not count as income (and I know some of my friends will disagree). Remember: Credit cards =/= income; credit cards = debt. However, before you go and cut up all your plastic, Cynthia says that it is good to have a credit card handy for emergencies, like if your computer breaks or if your bike is stolen.
Speaking of emergencies, the ‘recommendation‘ is usually to have three months of expenses ready, but really, that’s easier said than done. The most important thing is to start saving now, and Cynthia suggests saving 10% of what you have/will make. Always pay yourself first and do it right away, because even if the amount is small, you’ll have something to fall back on in case if an emergency does come up. Plus, if you don’t end up using the money, congratulations, you can start paying for your student loans.
Tracking Your Money
So you have a plan now. It’s time to see whether or not you were realistic! Sometimes, what you think you spend and what you actually spend is not the same. Use the free agenda that UTSU gives out every year and mark down what you spend in a week. The final tally may surprise you, because a dollar here and a dollar there (or, a bag of chips here, and a hot dog there) doesn’t seem much, but it can add up. If you’re using more than you planned, it’s time to curb your spending on the non-necessities of your life.
It’s a “trade-off”, says Cynthia. Your social life may change: you may have potlucks instead of going out every weekend, or seeing Free Friday films or borrowing from the library instead of going to the movies. What is important is to not give up on the things that are important to you. For Cynthia, that was volleyball. Rather than Starbucks every morning, she got Tim Hortons instead and used the money she saved to pay for league fees. When you have a limited budget, you have to compromise. You have to know what you really love and what you can do without.
The greatest thing about being part of the university and being at the heart of Toronto is the amount of free or close-to-free things that are available to you. So be aware of the resources, services and pricings that are available to you as a student and take advantage of them! Whether it be your free membership at the Athletic Centre and Hart House, or the free pancakes and lunches available every so often, or the free admissions to the various art galleries and museums downtown, be creative!