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4 Back to School Budget Tips

School can be expensive, and tuition is only a fraction of the overall cost. Learn to plan a student budget and manage the finacial risks of post-secondary education by following these simple tips.

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The Cost of an Education

For many students, the end of high school is the beginning of a whole new set of life lessons. It may be the first time they live away from home. It may be the first time they borrow money. There are also new saving and spending decisions, student loans, credit cards and more. These necessary money choices don’t leave much room for trial and error – the mistakes you make in college or university can follow you through the rest of your life.

Here four financial survival steps for school:

The Investor Education Fund offers unbiased financial information to the general public via GetSmarterAboutMoney.ca. The not-for-profit organization was established by the Ontario Securities Commission (OSC), and is funded through OSC enforcement settlements.

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1. Save to Pay for Education Costs

Tuition fees are just the tip of the iceberg when it comes to the full cost of higher education. Total costs include textbooks and supplies, transportation, and other living costs. Use this University Cost and Debt Calculator to better understand what you need to cover your costs. In addition, research bursaries and scholarships. They aren’t just for straight-A students, and they can make a big difference in how much you need to save.

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2. Plan a Budget to Last the School Year

No matter who is paying the bills, you need to have a budget and stick to it. By setting limits on spending categories and sticking to them, you’ll be able to enjoy yourself without running into trouble later in the school year, and later in life. Tip – don’t cut out all discretionary spending. If you don’t budget for any fun, chances are you won’t stick to your plan.

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3. Manage Your Debt

Each year, thousands of Canadian students turn to government loans to help pay the cost of education after high school. These loans offer certain advantages, but they won’t cover the entire cost of your education. And it can be a real challenge to repay the loan after you graduate and start working — and have other bills to pay.

According to the Canadian Federation of Students, many students are faced with a debt load of more than $20,000 when they finish school. Need a plan to repay student loans? Use this Student Loan Calculator to find the best repayment approach for you.

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4. Use Credit Cards Wisely

This is an area where many students get into trouble. Credit cards by themselves are not the issue – how you use them is. If you can’t pay back what you owe quickly, or you just make minimum monthly payments, you’ll pay a huge amount of interest over time.

Credit card companies work hard to sign up students. That’s because they know you are likely to stay with the same card once you sign up. Also, they know that many students will run up balances before they really understand how the card really works – and how much interest they will have to pay.

You don’t need a credit card to make it through college or university. If you must have one for emergency purposes, make some rules about what constitutes an emergency. Make sure your purchases are within your budget, and pay off your entire balance in full each month.