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2 Easy Ways to Avoid Debt in University

Starting university for the first time means you have a long list of things to accomplish this summer. Add to that the general excitement and anxiety of an entirely new environment and routine, and you might feel like you’re in mental overload, without an emotion to spare. You might be feeling the financial pinch, too, without a single penny to spare. Starting school can be expensive, and can certainly lead to debt.

Now is a great time to play around with your financial routine and find the money management strategies that work for you.

Finding budget options and savings strategies that compliment your style and personality — not to mention your lifestyle — can do a lot to help you avoid debt in the months to come. Bonus: it will also lower your stress levels!

Here are two basic concepts for managing your money and avoiding debt as you start the school year.

  1. Budgeting

Sometimes just the word “budget” can make people cringe. Budgets are often thought of as stiff, unaccommodating and boring.

But that’s really not the case. Budgets take on all shapes and sizes and can be customized to your lifestyle, interests and needs.

Futurfund has a useful article on budgeting for students and shows clear examples of how different people in different situations can mould their budgets to suit them.

Budgeting is especially important at the beginning of a university career because there are so many unexpected and unfamiliar costs that arise.

Your mode of transportation might change during the year (some students prefer to walk or bike in good weather, but want a car or bus pass for cold months). You might plan on getting a dining hall pass, but soon discover the food choices or the hours don’t accommodate your needs. Or, you might drop and add classes that put new financial demands on you at the last minute — textbooks, lab supplies or electronics can add up to unexpected debt.

Think of a budget as a way to track the financial decisions you make each month. A budget allows you to plan ahead and put money aside for things you’re expecting, but also tracks the things you didn’t see coming. That will help you reduce your spending elsewhere to avoid debt and you’ll be able to create an even more personalized budget for the next month (or semester).

If you start practicing your budget in the summer, you’ll have time to adjust it to your preferences, and get used to tracking your spending so that when the semester starts it’ll feel like second nature.

Check out these budgeting options:

The Financial Consumer Agency of Canada has a budgeting “starter package” which can help you brainstorm some basics and get your juices flowing.

Mint offers online and mobile budgeting tools and takes the time to discuss some of the issues you’ll be facing.

My Money Coach helps you plan ahead by taking a semester by semester approach which lets you see the big picture of expenses.

  1. Saving

On the topic of eliminating debt while you’re in school, Jeannine Mitchell of Student Finance 101 says, when you’re young, it’s often easier to save money than it is to earn it.

For many students, this couldn’t be more true. Not everyone has the ability to earn a great deal of money while they’re in school, which means that you’re always spending money, not making it. And that could mean accumulating a lot of consumer debt, and student debt, over the months and years.

That’s why it’s important to find different ways to save that make sense for your specific lifestyle.

Saving while you’re in university isn’t just about the passive squirrelling away of nickels and dimes (or twenties and fifties if you have generous grandparents). It’s about finding ways to slow and minimize your spending to make your limited funds go further. Consider these possibilities:

  • Negotiate your contracts. Phone, internet, cable, whatever you have, ask for a deal.
  • Talk to your bank about fees. Many banks will wave account fees for university students.
  • Find the cheapest living accommodations to suit your style. That might be the most dressed-down on-campus lodging, or finding several roommates, or, living with family.
  • Take your first year or two at a community college. Many colleges may offer the exact same introductory courses that you need for your program but you can save money doing it. You could save housing and transportation costs, and tuition could be lower.
  • Take advantage of student retention programs, bursaries, scholarships, or tax rebates each and every year.
  • Choose your lenders wisely. Remember the Bank of Canada’s recent interest rate hikes. Many financial experts are advising Canadians to start paying down their high-interest credit card debt before they need additional help with their debt. Credit cards should never be your default payment method.

Learn about the pitfalls of credit cards and borrowing in this article from Money Maple.

Starting university is expensive, but it doesn’t have to mean skyrocketing debt. Think about the type of money management and budgeting that will suit you best, and put those strategies in place to avoid student debt.

How are you planning to cut costs in school? Tell us on Twitter. #BackToSchool #DebtSolutions #CollegeReady



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