Three money skills students will want for university or college — and ‘loud budgeting’ is top of that list

Hands down, the most important financial skill every post-secondary student needs to learn is budgeting.

Second and third on the essential skills list are managing credit and value consciousness.

Make your budget a loud one

A budget is a plan for your money and when you follow one, it helps avoid unnecessary debt. “Loud budgeting” is a new trend where you get to be vocal about what fits your budget, and what doesn’t, without any social stigma. As an example, it’s socially acceptable for students to just say “I’m not spending money on that brand new laptop when I can buy one used, and save the difference for a camping trip next summer” or “Going for dinner doesn’t fit my budget, but coffee does. Want to do that instead?”

Some loud budgeters take it to the next level and post all about their budgeting journey on social media.

To be a loud budgeter you first need to have a budget. Download any student template from Google that you like, and get building.

For income, this is generally a part-time job, money from parents, and student loans or lines of credit.

Before you commit to forking over cash on the first hip place you see, ask yourself these questions.

For expenses, include your living expenses, cellphone bill, internet, transit pass, books, groceries and other items like social spending.

Your template will subtract your expenses from your income, to show you if you have any money left over. If you do, save it or enjoy it! If it is negative, that means you’re spending more than you are bringing in and you’ll need to cut back or make more — otherwise you’ll go into debt.

Most financial institutions have a mobile notification system to help you track your transactions. Notifications help bring awareness to your spending and give you insights on how well you’re following your budget. I also know plenty of young people who prefer to track their spending on their phones by keeping notes.

Any budget tracking system can work so long as you can stick with it. Budgeting apps like YNAB are popular, but they might be overkill. Student budgets are typically quite simple.

Your budgeting journey can be as loud or as quiet as you’d like. What we know for sure though, is sometimes it’s helpful to share a little with others so you’re not alone and can learn from each other — everyone could use a new budgeting hack from time to time, right?

You only need one credit card to build a strong credit rating

Credit card lurchers are everywhere on campus.

“Sign up and get a T-shirt” … or free Netflix for the school year.

The truth is having a student credit card is essential in building up a credit score and managing living expenses in our digital world — groceries, utilities, Spotify, Amazon, etc.

But students get into trouble with credit cards in three ways: First is having too many cards, which leads to overspending temptations. Second is using up too much of the credit that’s available, aka “maxing out.” Third is not paying them off in full and on time, resulting in high interest charges between 19 and 22 per cent.

And not paying the money back at all is a big no-no. It will eventually get sent to collections and will destroy your credit score.

My best tips to students on credit cards are to sign up for one card and keep the limit manageable at $1,000. Limit purchases on that card to essentials only. Every 30 days, pay your credit card on time and in full.

If you follow those tips you’ll watch your credit score build very nicely. Many banks offer credit score viewing for free. If yours doesn’t, I like CreditKarma and Borrowell as alternatives. A score of 650 is considered “good,” and that takes time.

Value consciousness is how to make your money go further

This is all about deal hunting, buying things on sale, using coupons and flyers to guide your purchases. Having patience to ensure you’re getting the very best value for your money will pay off. It’s also a great habit to prevent impulse buying habits from forming.

Make saving money a social norm with your friends. Who can find the best happy hour? The least expensive cellphone plan or grocery store? Who’s maximized the rewards and points programs they belong to? Who’s getting free banking and student discounts?

I absolutely love how students are embracing the second hand market for just about everything, too. It’s a great way to save and reduce your environmental footprint.

To lighten the financial load further, many students work while doing their post-secondary studies, and save what they can to put toward tuition, books, etc. If loans are inevitable, that’s OK. Student debt is considered good debt. It’s used to build an asset — your future income earning potential. When you graduate, you’ll make your plan to pay it off, and can focus on building an exciting career.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star