Financial Advising

Sources of income – money you have coming in:

• Student job
• Scholarships and/or bursaries.
• External awards
• Tutoring, hobbies and talents.

Expenses – money you are paying out can be:

• Fixed – stays the same every month. (e.g.: cell phone bill)
• Variable – can change monthly and can be cut back more easily. (e.g.: groceries)
• Irregular – occur during different times in the year. (e.g.: fall and winter tuition and fees)
• Unplanned – surprises that are not expected. (e.g.: unexpected flight back home)

Balancing your income and expenses can be done with the aid of a personal budget.

A Budget is a great way to organize your money monthly.

Income – Expenses = Surplus or (Deficit)

When your income is more than your expenses you will have a surplus, extra money in your pocket.  If your income is less than your expenses each month you have a deficit which means you are in debt.  There is good debt, a payment you can make each month and there is also bad debt, a payment that you cannot afford each month.

If you are just starting out with a budget, a great way to do so is to keep all of your receipts and log them for one month.  This will not only assist with your budget, of things you may have forgotten, but also to show you what you are actually spending your money on.  In many cases, there may be ways that you can cut back.

Tips to decrease your expenses:

• Make purchases at the end of the season when they are on sale. (e.g.: winter jacket)
• Use coupons especially if the item is already on sale. (e.g.: view the online weekly flyers)
• Look for already reduced items. (e.g.: retails clearance sections)
• ‘Do it yourself’. (e.g.: prepare your own meals)

Budget Spreadsheet

While Credit cards can be an example of good debt (helps to build up your credit score) it can very easily be an example of bad debt as well.  If you can afford to pay off your monthly credit card bill then that is good.  If you can only afford to pay off the minimum monthly required payment each month, this can be a starting point for bad debt in the future.  If you cannot afford even the minimum monthly payment that it is an example of bad debt.

It is very important for students to understand their credit score.  In Canada, credit scores range from 300-900 points, the best score being 900.  Your score will change over time as your credit report is updated.  Businesses use your credit report and score to see how risky it would be for them to lend you money (for such things as a mortgage, car etc.).  While they are very important, credit scores are usually not the only thing a lender will look at.  Often, they will also consider other factors such as your income, job or any assets you own (something of great value).  Therefore, if you can afford to make your monthly payments you will maintain a good credit score, if you cannot afford to make your monthly payments then you will have a bad credit score.  Having a bad credit score may greatly affect what you may need and/or want to do later in life.

Credit Card Payment Example: 

Let’s say you credit card statement this month is a total of $500.00 and your minimum required monthly payment is $10.00.  If you only make the $10.00 monthly payment, at an interest rate of 19%, it will take you 8.4 years to pay off the $500.00 with total interest paid of $498.52.  That is a total of $998.52!

It is important to note that if you make small payments through-out the month on your credit card, but it does not total the monthly statement amount, you will be charged the full monthly interest rate as if you never made a payment at all.  If you do not want to get charged the monthly interest fee, you must pay the monthly statement amount in full by the monthly due date.

There are many resources available at the Financial Consumer Agency of Canada (FCAC).