With inflation at its highest, it's time to start skipping those $5 coffees

This summer Canada’s annual inflation rate peaked at its highest since 1991. While these relatively poor economic conditions affect all Canadians, it has taken a greater toll on post-secondary students who are dealing with a multitude of different expenses beyond their necessities, such as tuition, student fees, health insurance and course materials.  

Of course, inflation is to blame for the increase in student spending over the years. However, these economic circumstances do necessitate better financial planning from students to ensure they maintain a healthy lifestyle and effectively reduce their outstanding student loan debt. 

Before students can begin financial planning, however, they must break down the biggest barrier standing in their way – differentiating between their needs and wants. This is easier said than done. It takes responsibility, and more importantly, a strong sense of self-discipline.  

Everyone is guilty of impulsively splurging their dollars from time to time but habitual spending on needless items can quickly add up, especially during the current period of inflation. It takes practice to question whether a purchase is absolutely essential and budgeting can help. A survey by the Financial Consumer Agency of Canada found that Canadians, under the age of 35, who budget are less likely to graduate with student loan debt compared to non-budgeters.   

Just as students plan out time to study and complete assignments, it is worthwhile to create a budget that sets limits on weekly, monthly and annual spending. This may involve tracking regular purchases to gauge where money is being spent unnecessarily. For some that inessential spending may look like $5 coffees every morning or a spontaneous purchase of a pair of $200 shoes. The point is these dollars could be better spent elsewhere.  

On the other hand, some students may be having trouble even affording their necessities, causing them further stress and anxiety.

With the immense pressure students face in their everyday lives, it is understandable budgeting is not always a priority. Students may feel overwhelmed or simply lack the time to even think about planning out their finances.

Whatever the case may be, all students must improve their financial literacy. Not only are these skills valuable for dealing with educational expenses, but it provides students with the confidence and capacity to make well-informed financial decisions later in life. There are many resources offered by Mac’s Money Center and the Government of Canada can help improve your financial literacy. 

If this was not convincing enough, consider that being mindful of personal purchases and effective budgeting also promotes the development of financial wellness. By managing their money, individuals prevent and mitigate the stress invoked by poor financial conditions. In these ways, an individual’s financial health has a tremendous impact on their overall health and well-being. 

In the current economic climate, students face the rising costs of tuition, rent, food, clothing, entertainment and, not to mention, higher interest rates on student loans. But inflation does not have to completely ruin your morning stops at the coffee shop. With effective financial planning, you can become financially independent and still treat yourself to those $5 coffees without hurting your wallet.