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By Adriana J Noton
After all of the long weekend getaways, days at the beach and nights on the town this summer, fall is the prefect time to create a responsible financial plan before the end of the year.
While everyone can excuse a little excessive spending in the hot months by saying ‘it’s ok – it’s summertime’, once September arrives, it’s time to get realistic and back into better spending habits. So, what does this mean exactly? Well, it may be time to put the credit card away and start drawing up a budget. This applies mainly to students for whom the allure of a credit card may be too tempting. Money is very easy to spend in university, especially when you can’t see it. Credit card companies understand that student’s are easy ‘prey’, as they are new to the concept of a credit card. It is therefore, more likely they likely they will fall into financial debt. As secure as a credit card may make you feel, and as tempting as they may be, a credit card should be used responsibly.
The number one thing to remember is a credit card is not ‘free money’. You will have to pay back everything you charged on that card back one day, and if it takes you too long, it will cost you significantly more money due to high interest rates. However, a credit card is also a great way for a student to start building a good credit rating. So, when it comes to making large purchases for the future, for example a home, banks will see that your credit rating is good and you won’t have any problems being approved for a loan. The major problem is when people build such massive debts and a bad credit rating during their student days, it will come back to haunt them in adulthood.
So, what can a student do now to help prevent high debts in the future? Well first of all, you will notice many credit card companies set up stands on campus to entice students to sign up with their ‘student credit cards’. No matter what you call it, a credit card is a credit card. Before you start the year draw up a budget that you know you can adhere to.
Try something like this:
— Start with adding up your fixed monthly expenses: rent, insurance, utility bills, etc.
— Then add in expenses that will fluctuate like groceries, gas or transportation costs, etc.
— Don’t forget to leave room in your budget for entertainment, eating out, shopping, leisure activities or anything else you buy regularly like a magazine or a morning coffee.
— Start keeping track of your debit and credit card statements to see where you are spending the most money, and where you can make an effort to cut back. Reducing the amount you spend on coffee or the weekly magazine could help you save money for something bigger like a new computer or a vacation.
— Try to pay off your entire credit card balance every month. If you don’t have enough money in your account to buy a specific item then think twice before you make the purchase
— Keep all of your receipts accessible, with a running tally, so you know how much you’ve spent every month. Then when your statement arrives and you discover all the purchases you have charged on your credit card you won’t be in for a shock.
The student life can be a tough one, and spending beyond your means will only add to the stress. So a budget is key to your survival. If you have problems developing a budget, look on your campus website for help or talk to a financial advisor. There are usually seminars and people who are there to help. Start the fall off right and develop a budget that you will be thankful for in the long run.
About the Author: Thousands of Canadians struggle with debt each and every year. For non-profit
resources and tips visit Consolidated Credit; teaching consumers how to budget, get out of debt, and use credit wisely.