CALGARY, Sept. 18, 2013 /CNW/ - With the new school year in full swing, students - and parents footing the bill - are starting to see the expenses pile up. The increasing cost of tuition, textbooks, rent and school supplies is making some question whether getting a degree is an affordable option.
According to the Canadian Federation of Students, the average student in Canada graduates with a debt load of $37,000.
With all the tempting loans and credit available to students, it's easy to get into trouble very quickly. Student loans and lines of credit are great tools to help pay for tuition, textbooks and the necessary expenses associated with school. But with income levels low and expenses high, it's easy to misuse loans for a spring break getaway, nights out, rent or general day-to-day expenses. With this mentality, many graduates find themselves overwhelmed with debt.
Following these five rules will help students make the most out of their post-secondary years, without the crushing debt load to match.
Spend less than you earn
Simply put, spending less than you earn is the key to getting you on the road to riches. Unfortunately, a CGA Canada report found that Canadians today owe $1.53 for every dollar they earn. Evaluate all your purchases and make sure you can truly afford what you buy. Don't waste cash on frivolous items or expensive things you really don't need.
Make a budget to find out exactly how much cash you have to spend, how much you have to cut back or how much more you need to earn to maintain your expenses. Save up for the things that make up the well-rounded student experience - like a spring break getaway or a weekend trip with a sports club - instead of spending your loan. Increase your income by working a summer or part-time job, applying for scholarships (there's $70 million available in scholarships, bursaries and grants nationwide) or doing a co-op degree.
Sacrifice a little
Living away from home and driving are huge expenses. A survey conducted by RateSupermarket.ca found that a university student can save $45,000 on living expenses over the course of four years and the college student can save $11,000 over two years by living at home.
It may not be the ideal situation for you (or the parents for that matter) but if it's feasible, it may be beneficial to postpone moving out. Save even more by taking advantage of a transit pass that is likely covered by your tuition. It's easy to spend $5,000 a year on driving and that doesn't even include the purchase price of the car. While these sacrifices may cramp your style, we are talking about saving tens of thousands of dollars here - it may just be worth it.
Invest in education
Education is definitely worth the investment - even if it means going into debt. It may seem like a huge expense now but the skills and credentials will up your future earning potential exponentially throughout your life. Consider this: according to MoneySense's Guide to Retiring Wealthy, the median annual wage of Canadians with bachelor degrees is $18,500 a year higher than the wage earned by high school grads. This will most likely amount to an extra $650,000 in income over a 35-year career. Just be sure to plan ahead - switching from major to major or taking unnecessary courses can prolong your degree and drive up your expenses. Sitting down with a career counselor will help you choose the right classes.
Manage debt wisely
Every dollar you spend on credit or a loan today is one dollar less you have to spend in the future. Avoid racking up your credit card and only use your student loan for school related expenses. If you are short at the end of the month, either up your earnings or reduce your spending. Make a scheduled plan to have your student loans paid off five to seven years post-graduation. Anything more than that may interfere with your financial goals of buying a home or starting a family in your 30s.
No one cares as much about your finances as you do. There are plenty of resources to help you gain the financial literacy skills to create success for you while you're in school and post-graduation. For more information on how to survive school without going broke, visit mymoneymyfuture.ca and download My Money $ My Future - Post Secondary Edition - your free financial guide to get you through school, without going completely broke. The Chartered Accountants Education Foundation of Alberta also provides information and activities on financial literacy for junior high and high school students at its website: www.themoneyproject.ca.
My Money $ My Future and the Money Project are financial literacy campaigns brought to you by the Alberta Accountants Unification Agency. In Alberta, the Certified General Accountants of Alberta, the Certified Management Accountants of Alberta and the Institute of Chartered Accountants of Alberta are working toward unification under the new Chartered Professional Accountant designation. Find out more at www.mymoneymyfuture.ca, www.themoneyproject.ca and www.albertaaccountants.org.
SOURCE: Certified General Accountants Association of Alberta
For further information:
Please contact Janice Harrington, Vice President, Communications and Government Relations, at (403) 614‐7941 for further information and to arrange interview opportunities.