By: Daanish Kachalia
Warren Buffet is the third richest person in the world, yet he never spends more than $3.17 on breakfast, drives a $35,000 car and lives in a house priced lower than the average Toronto home.
With debt at an all-time high within millennials, many students need to manage their money more effectively. According to a Northwestern Mutual 2018 Planning and Progress study, millennials hold an average debt of $36,000. According to the same study, paying debt off is not listed as a top priority for millennials. When it comes to managing your money as a student, saving it is essential.
One may question, why can’t debts be paid off later? The simple answer to that is to secure an earlier financially-stable future. The most obvious factor to consider is interest rates, as they can add up to hundreds of thousands of dollars over time and can be detrimental to a debt-free future.
There would undoubtedly be times when you cannot refrain from spending, like eating out with friends, partying or buying school supplies, but there are ways where your savings can be optimized by some simple tips that you can apply starting today. These tips, which are by no means exhaustive, are created by a student, with students in mind!
If you are living away from home, buying groceries or personal hygiene items can be quite expensive. It is important to note items that are on sale and to buy them in large quantities, especially if it is a necessity. For example, if toilet paper is on sale for $1.50 off, buying the supply for the rest of the school year will result in an immediate return on your money.
Making your money sit in a chequing account is possibly the worst action one can take as it is essentially not growing. Instead, your Registered Education Savings Plans, grants and savings should be placed in a high-interest savings account. By doing this, your money will accumulate over time via interest and you will make riskless return that you would not make otherwise.
Partying is one of those activities where you don’t mind spending money after a stressful week. Although there are certain costs you cannot avoid, there are also many where you can immediately save. Taking the bus being one of them. Why take an Uber or taxi when you can get around the city for free or significantly less? Of course, it would not be as comfortable or efficient, but as students just trying to get by, this method is substantial for a healthy bank account.
This tip may be the most obvious of the bunch, yet many students somehow spend hundreds of dollars throughout the school year on food which is very much an avoidable expense. The best solution would be to meal prep. If you know that you will have a busy schedule in the coming weeks, you should prepare your food ahead of time so you have it available when needed.
Sometimes, many of us unconsciously spend without even realizing it. Knowing where your money goes and taking corrective action can potentially result in a surplus of money by the end of the school year. Today, almost every retail bank offers free analytics on your spending through online and mobile apps. These analytics offer insights such as the months you spend the most on, categories you spend on and spending behaviours. With tracking your expenses, you can possibly realize your unnecessary costs and take the corrective action to reduce spending.
There is no doubt that saving your money effectively can result in less debts and a more financially stable future. When it comes to managing your money as a student, saving it is the key ingredient. Warren Buffet should serve a role model for us all, as he has a net worth of $84 billion USD yet lives a more conservative lifestyle than most of us do as students.